Nearly half of young Britons wrongly think AI financial advice is regulated

Almost half of young adults in the UK mistakenly believe AI-generated financial information is regulated, according to new research, underlining the risks associated with the technology’s growing use in investing and financial decision-making.

Some 44 per cent of 18- to 40-year-olds surveyed by the Financial Conduct Authority said they thought financial information from AI chatbots was regulated, while 32 per cent wrongly thought they would get compensation if the AI advice went wrong.

“AI is rapidly becoming the first port of call for a new generation of retail investors, but confidence is clearly running ahead of understanding,” said Rob Hillock, head of personal financial planning at consultancy Broadstone.

People of all ages are increasingly turning to AI tools for guidance on budgeting, investing and other personal finance topics. But research indicates that usage is particularly high among young people.

Among 18- to 24-year-olds, 76 per cent have used AI for personal finance, compared with 47 per cent of 55- to 64-year-olds, according to a 2025 survey by Lloyds Banking Group.

Ben Yearsley, director at consultancy Fairview Investing, said AI tools were “a useful starting point” for financial information and could help narrow the financial knowledge gap between those who can afford regulated advice and those who cannot.

“Where a lot of people are going wrong [is] they’re using it as the end point,” Yearsley said, adding that AI companies should introduce “a clear risk warning” when chatbots answer financial questions.

Ben Pashley, chief AI officer at wealth management firm Evelyn Partners, said that chatbot responses could “come across like personal recommendations without the accountability or data protection that applies to regulated financial guidance”.

Thirty-eight per cent of 18- to 40-year-olds believe it is fine to make an investment decision based solely on the outputs of AI, according to the FCA’s survey of nearly 700 UK adults in this age group who either currently own investments or would consider buying investments soon.

The City watchdog said AI could help people research companies or explore their options before making a decision, but they needed to use their own judgment and understand how they are protected.

However, the research also indicates that many young adults are aware of the pitfalls of using AI for personal finance. Eighty-six per cent of those surveyed said they understood the need to check the sources referenced when using AI to research an investment.

“People are using AI broadly quite sensibly and there’s a healthy level of scepticism,” said Holly Mackay, founder and chief executive of finance site Boring Money. “The risk is people not understanding when financial services brands are using AI to deliver lower-cost help and assuming that, because it’s a financial brand, it’s financial advice and comes with those sorts of protections.”

The Financial Services Compensation Scheme can pay up to £85,000 to an individual who has lost money due to bad financial advice from a UK-regulated financial institution that went out of business after April 1 2019.

The FSCS said: “FSCS only protects regulated financial services provided by authorised firms. General-purpose AI tools are unlikely to fall within the scope of FSCS protection.”