FCA urges AI providers to help consumers understand limits of AI-generated advice

The Financial Conduct Authority (FCA) has called on artificial intelligence (AI) providers to include disclaimers to help consumers understand the limits of financial advice provided by their models.

In a speech, FCA chief data, information and intelligence officer, Jessica Rusu, said that AI would redefine financial services with the ability to increase productivity, improve competition and services, and drive economic growth.

“The FCA wants the UK to be at the forefront of the safe adoption of AI in financial services,” she stated.

“Consumers are turning to general-purpose large language models (LLMs), like ChatGPT, Gemini and Claude, for financial information and advice, while regulated firms are beginning to integrate their services into AI platforms.”

While Rusu acknowledged this was “good news” as it could significantly broaden access to financial tools and information, it could also blur the boundary between regulated and unregulated activity, and consumer protections.

In light of this, the FCA has published a good and poor practice guide, focused on consumer centricity, accountability and governance, and operational resilience.

“The Consumer Duty provides an outcomes-based regulatory framework,” Rusu said.

“We’ve seen firms using AI for inclusive product design, clear consumer choice, and a path to speak to a person.”

However, the regulator had also observed poor practice, such as firms developing AI tools without a clearly defined need, excluding vulnerable consumers by default, overstating capabilities, or deploying automated customer journeys without sufficient testing.

Too many firms were still under-investing in AI-related governance, Rusu added, while firms were also urged to stress-test AI systems and ensure they had proper cyber insurance in place.

“Poorly governed AI can create consumer harm, cyber vulnerabilities and operational failures, potentially at much greater speed and scale,” Rusu said. “That is why firms need to invest now in cyber and operational resilience.”

Rusu concluded by saying that AI was moving faster than any regulatory framework was designed, meaning regulators increasingly needed to make judgements without precedent.

“We remain focused on our strategy, becoming a smarter regulator, using technology to become faster and more effective, enabling markets that work well – for consumers, for growth, and for the long term,” she said.

“Building on our world-leading approach to innovation and proportionate regulation, we believe developing the best approach to deploying AI safely is what will differentiate the UK market.”

Commenting on the speech, Quilter proposition director, Sam Christopher, said: “The FCA’s decision to call directly on AI providers to help consumers understand the limits of financial information and advice generated by their models is a significant and welcome step.

“General-purpose AI is increasingly influencing financial decisions before someone ever reaches a regulated firm, so consumers need clarity about what these tools are providing and what protections they have.

“Ultimately, there is a considerable opportunity here. AI can improve engagement, increase adviser capacity and help more people access financial support, meaning it should be part of the solution to the advice gap.

“The industry needs to work closely with the FCA as we learn more about the opportunities and risks, remaining nimble enough to innovate while ensuring customers are protected from harm.”

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