The UK’s financial watchdog has warned people who use artificial intelligence (AI) for help investing that they may not be protected if things go wrong, amid the surging popularity of chatbots.
Four in five less experienced investors have used AI tools for help with their investment decisions, new research by the Financial Conduct Authority (FCA) found.
The survey of adults aged between 18 and 40-years-old who own investments, or are considering buying investments in the next year, found that 56% trust AI tools.
This was a bigger proportion than the 47% who said they trust TV and radio, 46% who trust the press, and 29% who trust social media influencers.
Three-quarters of the respondents expect to lean on AI more over the next year.
But the FCA said its research showed that some people who use AI chatbots, which interact with users through human-like conversations, may be misunderstanding the risks that come with unregulated financial advice.
open image in galleryAI-generated financial information is not regulated by the FCA – but 44% of those surveyed believe it is.
Some 38% said they think it is fine to make an investment decision based solely on AI-generated information, and nearly a third mistakenly think they would get compensation from the Financial Services Compensation Scheme or Financial Ombudsman Service if AI advice went wrong.
While general-purpose chatbots, such as OpenAI’s ChatGPT and Google’s Gemini, are not regulated by the FCA, specific tools created to offer financial advice are more likely to be covered.
Younger adults appeared to be more aware of the limitations of AI-generated information, with 73% saying they know that it can be inaccurate and 86% understanding the need to check the sources referenced when using AI tools, according to the research.
Lucy Castledine, director of consumer investments at the FCA, said: “AI can help you research companies, understand jargon or explore options before you make a decision.
“But you need to understand how you’re protected and continue to use your own judgement. Our InvestSmart website can also help you make more informed decisions.”
The watchdog said people can use AI more safely when it comes to their money, such as by verifying sources, understanding that AI cannot predict how investments will perform, and thinking long-term when it comes to investing decisions.
A spokeswoman for the Financial Ombudsman Service said: “AI-generated financial advice is unregulated, meaning consumers may not have the protections they would normally expect if something goes wrong and would be unable to bring a complaint to our free service.”