FCA warns of protection gaps as UK's young investors flock to AI chatbots for financial guidance
FCA warns of protection gaps as UK’s young investors flock to AI chatbots for financial guidance #
Younger British investors are using artificial intelligence for financial guidance in growing numbers and trust it more than traditional media or celebrity influencers, but the Financial Conduct Authority says many may not understand the risks involved.
Research commissioned by the FCA as part of the Mills Review into AI’s impact on retail financial services found that 56% of adults aged 18 to 40 who hold or are considering investments say they trust AI tools. That figure exceeds trust in television and radio at 47%, the press at 46%, and social media influencers at 29%. Three-quarters of those surveyed said they expect to rely on AI more heavily over the next twelve months.
The data came from a survey of more than 5,000 UK retail financial services consumers conducted in April 2026 by Yonder Consulting, with a focus on less experienced investors between 18 and 40. Four in five respondents in that group said they had already used AI tools when making investment decisions, an adoption rate the FCA says is outpacing public understanding of how these tools work.
The watchdog’s central concern is a consumer blind spot around regulatory protection. AI-generated financial information is not regulated by the FCA, yet 44% of respondents believed that it was. Nearly a third mistakenly assumed they could seek redress through the Financial Services Compensation Scheme or the Financial Ombudsman Service if AI-generated advice led to losses. And 38% said they considered it acceptable to base investment decisions entirely on AI output.
The research was published alongside the Mills Review, led by FCA Executive Director Sheldon Mills, which concluded that AI is set to become “a defining force” in retail financial services by 2030. The review makes seven recommendations to the FCA Board. It also found that one in five UK consumers, roughly 11 million adults, said they would be willing to use AI systems capable of acting autonomously on their behalf within pre-set financial goals.
FCA Chair Ashley Alder said the board was grateful for the “rich, comprehensive report,” while Sheldon Mills described AI as creating both significant opportunities and risks for consumers. The regulator indicated it would publish guidance on good and poor AI practice in financial services later this year, as it works to clarify where the regulatory perimeter sits in an era when chatbots are increasingly serving as de facto financial advisers for a generation that cannot afford or access traditional advice.
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