New research from the Financial Conduct Authority (FCA) suggests investors are increasingly using AI tools for investment support, despite widespread confusion about the protections available when relying on them.
Four in five 18 to 40-year-olds who own or are considering investments have already used AI for help with investing, while around two-thirds do so occasionally or regularly.
More than half (56%) said they trust AI tools, compared with just 47% for TV and radio, 46% for the press and 29% for social media influencers. Two-thirds also expect to use AI even more over the next year.
These findings reveal a notable gap between AI adoption and understanding of consumer protections.
Concerningly, almost half (44%) incorrectly believe AI-generated financial information is regulated, while 38% think it is acceptable to make an investment decision based solely on the output of AI.
Nearly a third (32%) wrongly believe they would be eligible for compensation from the Financial Services Compensation Scheme or Financial Ombudsman Service if something went wrong after relying on AI-generated information.
General-purpose AI chatbots are not regulated by the FCA, although tools specifically designed to provide financial advice are likely to fall within its remit.
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,” she added.
The FCA recommends that investors retain responsibility for the final decision, verify the sources behind AI-generated information and understand that general-purpose chatbots do not provide the same regulatory protections as financial advice. Investors should also maintain a long-term perspective and remember that past performance is not a guide to future returns.
More encouragingly, the research, conducted among 666 UK respondents aged 18 to 40, found relatively high awareness of AI’s limitations. Almost three-quarters (73%) recognised that AI can provide inaccurate information, while 86% understood the importance of checking sources. All respondents either owned investments or would consider buying them within the next 12 months.