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FCA Review Warns AI Chatbots Are Blurring the Line Between Guidance and Regulated Advice

FCA Review Warns AI Chatbots Are Blurring the Line Between Guidance and Regulated Advice

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An FCA-commissioned review has warned that AI chatbots may blur the boundary between generic guidance and regulated financial advice.

A Financial Conduct Authority-commissioned review has urged closer scrutiny of large language models as more UK consumers use AI chatbots for financial decisions.

The review found that more than a quarter of UK consumers trust tools such as ChatGPT, Claude and Gemini for financial advice, despite limited awareness that normal protections for regulated financial services do not extend to those platforms.

It also warned that widespread reliance on a small number of AI models, cloud providers and technology suppliers could create correlated behaviour and common points of failure across the financial system.

The boundary between generic information and regulated personal advice is becoming harder to define as AI systems provide continuous, tailored responses. Any extension of the FCA’s regulatory perimeter could affect fintech firms, banks, wealth platforms, AI providers and companies using automated customer guidance.

Companies and market relevance

Companies referenced include OpenAI, Anthropic and Alphabet/Google (NASDAQ: GOOGL). UK financial services firms deploying customer-facing AI may face additional governance, disclosure and compliance obligations.

Source: Reuters.

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