FCA warns of risks from unregulated AI financial advice

Summarised from 2 outlets · Updated 20 Oct, 11:20 · Archive

The FCA is calling on AI providers to better protect consumers increasingly using chatbots for financial guidance.

The Financial Conduct Authority is urging AI providers to improve consumer protections as more people turn to chatbots such as Gemini and ChatGPT for financial guidance. Brits have increasingly relied on these generic platforms for investment advice, particularly as traditional financial advice often remains out of reach. The FCA notes that 40 per cent of young investors mistakenly believe chatbots are regulated by the watchdog, leaving them unable to access help or compensation when advice goes wrong.

Jessica Rusu, chief data and information officer at the FCA, said the technology 'can significantly widen access to financial tools and information' but 'can also blur the boundary between regulated and unregulated activity'. The FCA is calling on AI providers to use 'clear, proportionate and consistent disclaimers' to help consumers understand the limits of financial information generated by their models.

Regulated firms have begun integrating AI into their services for various purposes, ranging from improving product design to routing complaints. However, Rusu noted that some firms are using the technology in 'poor practice' by developing tools that lack a defined need, exclude vulnerable consumers, or have overstated capabilities.

How it is being reported

• UK finance watchdog wants firms to report AI failures and close callsFCA seeks clear accountability as financial services embrace increasingly autonomous agentsThe Register · 20 Oct, 10:57
• FCA sounds the alarm on rise of unregulated AI financial adviceThe City watchdog is calling on AI providers to go further in protecting consumers as more people turn to the technology to make financial decisions. The Financial Conduct Authority (FCA) is urging AI firms to do more to help consumers who are increasingly relying on generic platforms and chatbots, such as Gemini and Chat GPT, [...]City AM · 19 Oct, 11:27

In this story: Financial Conduct Authority · Gemini · ChatGPT · Jessica Rusu

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