Young and less experienced investors now place more trust in artificial intelligence than in television, radio or social media influencers, according to research from the Financial Conduct Authority, which warns that many are leaning on AI without understanding how little protection they have if its guidance goes wrong.
Four in five less experienced investors have used AI for help with investment decisions, and about two thirds reported doing so occasionally or regularly. More than half of those questioned, 56 per cent, said they would trust AI tools, even though almost three quarters, 73 per cent, know that AI can provide inaccurate information.
Traditional sources fare worse. Just under half of respondents, 47 per cent, said they trust television and radio, 46 per cent trust the press, and less than a third, 29 per cent, trust social media influencers, according to the regulator’s survey, which polled 666 UK adults aged 18 to 40 who own investments or would consider buying them in the next year.
The protection gap
The FCA’s bigger concern is what investors believe happens when AI gets it wrong. Almost half, 44 per cent, mistakenly believed AI-generated financial information was regulated, and more than a third, 38 per cent, admitted to thinking an investment decision based solely on AI was fine.
About a third, 32 per cent, wrongly thought they would be entitled to reparation from the Financial Services Compensation Scheme or the Financial Ombudsman Service if AI advice were to be wrong. In reality those protections are limited to people who have received advice that causes harm through an authorised financial adviser, and an investment is not considered for compensation simply because it subsequently performs poorly.
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