The UK's financial watchdog, the Financial Conduct Authority (FCA), has issued a warning to individuals using artificial intelligence (AI) for investment advice, stating they may lack protection if problems occur. This caution comes as more people are reportedly using online chatbots for financial guidance.
Latest research from the FCA indicates that four out of five inexperienced investors have admitted to using AI tools to assist with their investment decisions. The findings also show that over 50% of 18 to 40-year-olds trust AI tools to make financial decisions for them, with young people increasingly favouring chatbots over traditional advisers.
The FCA highlighted that it does not regulate AI-generated financial information, despite 44% of Britons believing it does. Consequently, customers are not protected from potential harm caused by such technology, including popular chatbots like ChatGPT and Google Gemini. Nearly a third of people mistakenly thought they could receive compensation from the Financial Services Compensation Scheme or the financial ombudsman if AI advice proved incorrect.
Lucy Castledine, director of consumer investments at the FCA, advised that while AI can aid in research and understanding jargon, users must understand their protection and continue to exercise their own judgement. Financial advisers also caution against relying on AI, arguing it cannot replicate the tailored advice provided by a professional.