UK financial watchdog warns people about using AI chatbots for help investing
The Financial Conduct Authority (FCA) has warned investors that AI-generated financial advice may leave them without protection if things go wrong, as more people turn to chatbots for investment decisions.
The UK's financial watchdog has warned people against relying on AI chatbots for investment advice, saying they may not be protected if things go wrong.
Research by the Financial Conduct Authority (FCA) found that four in five less experienced investors have used AI tools to help make investment decisions.
The survey questioned adults aged 18 to 40 who either own investments or are considering buying them within the next year.
Some 56 per cent said they trusted AI tools, compared with 47 per cent for TV and radio, 46 per cent for the press and 29 per cent for social media influencers.
Three-quarters said they expected to use AI more over the next year.
However, the FCA found widespread confusion about the risks involved. Some 44 per cent of respondents incorrectly believed AI-generated financial information was regulated by the watchdog.
Meanwhile, 38 per cent said they believed it was acceptable to make an investment decision based solely on AI-generated information.
Nearly a third also mistakenly thought they would be eligible for compensation through the Financial Services Compensation Scheme or Financial Ombudsman Service if AI advice went wrong.
General-purpose chatbots such as ChatGPT and Google's Gemini are not regulated by the FCA.
Dedicated financial advice tools are more likely to fall under financial regulation, depending on how they operate.
Lucy Castledine, the FCA's director of consumer investments, said AI could still be useful for researching companies, explaining financial jargon and exploring investment options.
She said: "But you need to understand how you're protected and continue to use your own judgement."
The watchdog advised investors to verify information provided by AI, check its sources and remember that chatbots cannot predict how investments will perform.
Younger investors appeared more aware of the technology's limitations. Some 73 per cent said they understood that AI-generated information could be inaccurate, while 86 per cent knew they should check the sources it provided.
The Financial Ombudsman Service also warned that people could lose important protections when relying on AI-generated advice.
A spokeswoman said: "AI-generated financial advice is unregulated."
This means consumers may not receive the protections normally available if something goes wrong.
The FCA said its InvestSmart service could help people make more informed investment decisions.
