The Financial Conduct Authority (FCA) has called on general-purpose large language models (LLMs) such as ChatGPT, Gemini and Claude to provide "clear, proportionate and consistent" disclaimers when generating AI financial advice.

The regulator found that only two in five (40%) consumers recognise there is no recourse if something goes wrong after acting on AI-generated financial advice.

While the FCA said that LLMs can widen access to financial tools and information, it acknowledged that they can also blur the lines between regulated and unregulated activity, and the protections consumers receive.

The update comes after the regulator commissioned the Mills Review, which was published in July, focusing on how AI could reshape financial services by 2030.

In a speech earlier today, Jessica Rusu, chief data, information and intelligence officer at the FCA, said that firms should put consumers first as AI evolves towards increasingly autonomous systems, as well as maintain clear accountability and plan for when things go wrong.

She stated: "Poorly governed AI can create consumer harm, cyber vulnerabilities and operational failures, potentially at much greater speed and scale. That is why firms need to invest now in cyber and operational resilience. Our rules already require firms to report major incidents, and that must extend to significant AI failures and near-misses. As the AI Minister has recognised, near-miss reporting for agentic AI is becoming a national security priority. It is a regulatory priority too.

"AI is moving faster than any regulatory framework was designed. That means regulators will increasingly need to make judgements without precedent, while ensuring that trust remains at the heart of financial services. 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."

Proposition director at Quilter, Sam Christopher, said that the FCA’s call to help consumers with AI-generated financial advice is "welcome".

She concluded: "It is important, however, that the response does not become overly prescriptive while the technology and our understanding of it are developing so quickly. The FCA is right to put consumer protection at the heart of its approach while giving firms room to innovate, test and learn. Regulation needs to be able to evolve alongside the technology rather than trying to anticipate every possible use case today.

"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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