The FCA is demanding  AI platforms including ChatGPT, Gemini and Claude, introduce clearer disclaimers about financial advice generated by their models.

FCA has published its latest AI update which calls on firms who deploy AI to do so safely and responsibly so consumers see the benefit and firms continue to meet their Consumer Duty obligations.

In its latest report the FCA pointed out that when deployed safely and responsibly, it saw that AI could deliver significant benefits to consumers by improving efficiency, reducing costs, and enabling more accessible and tailored services.

Commenting on the latest data in a presentation entitled Building the future of finance in the age of AI, FCA chief data, information and intelligence officer Jessica Rusu said:

“AI is changing what happens before a consumer ever reaches a regulated firm. 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.

“The good news – this can significantly widen access to financial tools and information. But it can also blur the boundary between regulated and unregulated activity, and the protections consumers receive.”

“Through InvestSmart and the FCA Firm Checker, we already help consumers understand the protections they have. But warnings may be more effective at the point where AI-generated financial information is delivered.”

Rusu concluded: “So we are calling on AI providers to help consumers understand the limits of financial information and advice generated by their models through clear, proportionate and consistent disclaimers.”

Responding to the FCA update Broadstone senior actuarial director  Cormac Bradley said:   “AI has the potential to transform financial services by helping firms cut costs by improving efficiency and delivering better, more personalised outcomes for customers. But as its use accelerates and the technology becomes increasingly embedded across the industry, firms must ensure that innovation does not come at the expense of consumer protection.

“The FCA’s findings are a timely reminder that AI is not a regulatory free pass. While the regulator is rightly keen to encourage innovation, firms must have robust safeguards in place, with clear accountability and proper controls to manage the risks associated with increasingly sophisticated and autonomous technology.

He added:“The FCA’s paper on good practice and areas for improvement highlights the importance of these where AI can impact on Consumer Duty, particularly where it is being used to inform decisions that could have significant financial consequences for customers.”

“Ultimately, the challenge for financial services firms is to strike the right balance between embracing AI and managing its risks. Those that get this right will be best placed to harness the technology’s enormous potential, improve customer experiences and build the trust and confidence needed to drive wider adoption across the industry.”