FCA warns most young investors unaware AI tips carry no comeback
The City regulator says four in five under-40 investors have used AI for investing decisions, but most do not know they have no recourse if it goes wrong.
What the FCA said
The Financial Conduct Authority has disclosed that four in five less-experienced investors aged 18 to 40 have used artificial intelligence tools to help with investing decisions. The figures were set out by Jessica Rusu, the FCA’s chief data, information and intelligence officer, in a speech at Bloomberg’s UK Policy Series.
According to the regulator, only 40% of consumers correctly understand that there is no recourse available if something goes wrong after they act on advice from a general-purpose AI tool such as ChatGPT, Gemini or Claude. The FCA said consumers are increasingly turning to these tools for financial information before, or instead of, approaching a regulated firm.
Who is affected
The findings centre on younger and less experienced investors who use AI chatbots for financial guidance rather than going directly to regulated advisers or platforms. The FCA said this trend can widen access to financial tools and information, but it can also blur the line between regulated advice, which carries consumer protections, and unregulated output from general-purpose AI models, which does not.
The regulator pointed out that regulated firms are themselves beginning to integrate their services into AI platforms, adding a further layer of complexity for consumers trying to work out what protections apply to the information they receive.
The regulator’s response
The FCA said it is not seeking to expand its own regulatory remit to cover general-purpose AI tools directly. Instead, it said it wants to make the existing boundary between regulated and unregulated activity clearer to consumers. The regulator is calling on AI providers to add “clear, proportionate and consistent” disclaimers at the point where financial information or advice is generated, so users understand the limits of what they are being told.
The FCA said it already offers consumer guidance through its InvestSmart campaign and the FCA Firm Checker tool, which allow people to check whether a firm is authorised. It said these existing tools will be built on further, including through work linked to IOSCO’s first TechSprint, supported by the FCA’s AI Lab, aimed at helping investors spot scams, verify information and challenge unreliable AI-generated output.
This follows the Mills Review, commissioned by the FCA and published in July, which examined how AI could reshape retail financial services by 2030. The FCA said it is embedding six of the review’s seven recommendations into live work immediately, rather than carrying out further consultation. It is also working directly with banks on frontier AI security, including cyber defence and vulnerability patching, with those insights feeding into its supervisory and policy work.
What happens next
No new rules or compensation scheme have been announced. The FCA has not set out a timetable for when AI providers might introduce the disclaimers it is seeking, nor confirmed further detail on the planned TechSprint work. Consumers using general-purpose AI tools for financial information currently have no formal right of recourse if that information leads to a financial loss, a gap the regulator has said it wants to address through clearer warnings rather than new regulation.