Chartered Accountants Australia and New Zealand (CA ANZ) has provided feedback on the government's proposal for mandatory AI guardrails in high-risk settings. 

Our key recommendation was to leave at least 12 months from the introduction of the voluntary standard released on 5 September 2024. This will allow the government to consider feedback on the impact of the voluntary standard, who has and has not implemented it and why, and to assess the progress of AI and if regulation of AI in other jurisdictions has improved protections for consumers.

In consideration of mandating guardrails we raised the following concerns:

• Clarity Issues: The proposed principles and guidelines lack clarity, which might hinder consistent application across different entities and use cases.
• Subjective High-Risk Designation: There are concerns about the subjective nature of designating an AI system as high-risk, which could lead to inconsistent interpretations and applications.
• Enforcement Challenges: Enforcing guardrails on offshore AI developers and deployers is problematic, raising questions about accountability and legal responsibility.
• End User vs. Deployer: Clarification is needed on when an end user of an AI system might be categorized as a deployer, affecting the application of guardrails.
• Regulatory Oversight: It is unclear how regulators will ensure all guardrails have been implemented across the supply chain of high-risk AI systems, especially when multiple organizations are involved.
• Complaints Process: The proposed complaints process does not require reaching a resolution or providing compensation, adding compliance burdens without real benefits for end users.

These issues highlight the need for clarity, enforceability, and a balanced approach to mandate AI guardrails for high-risk AI systems.