Private Law Theory

ABSTRACT
This article argues for a statutory right to explanation in automated credit decision-making in the UK, as transparency and accountability are central to the rule of law. First, from a moral standpoint, we demonstrate that there is a double level of distrust in financial services and algorithms. Algorithms are unpredictable and can make unreliable decisions. Algorithmic challenges such as bias, discrimination and unfairness are exacerbated by the opacity problem commonly known as the ‘black box’ phenomenon. The informed consent process in automated credit decision-making is thus incomplete, which requires an ex-post right to explanation for completing the informed consent procedure. Secondly, our doctrinal and comparative legal methodologies reveal that countries such as the USA, Canada, European Union, China and Poland already provide a right to explanation to credit applicants under certain circumstances. We also present new empirical evidence of a public desire to have a right to explanation for unsuccessful credit applications.

Alison T Lui, George Lamb and Lola Durodola, A right to explanation for algorithmic credit decisions in the UK, Law, Innovation and Technology. Published online: 27 February 2025.