Britain Wants ChatGPT-Style AI Models Reviewed as More People Turn to AI for Financial Advice

Britain’s Financial Regulator Puts AI in Its Sites The UK financial watchdog is pushing the government to regulate big-name language models like ChatGPT as they become a growing part of consumers’ financial decision making. In a review headed up by FCA Executive Director Sheldon Mills, the regulator stated that a growing number of people are increasingly using AI chatbots for advice on savings, investments, and other money-related topics.

While they may produce some handy information, the models aren’t subject to the same consumer protection laws as a regulated financial advisor.

Why Regulators Are Paying Attention

The reason Regulators Are Looking: “These tools present an increasing risk to consumers due to the rapid rise in their use and reliance by consumers in the UK in making decisions relating to their personal finance.

‘We are seeing consumers turn to AI tools for all manner of financial advice. While the ability to provide informative summaries is valuable, this information is not accompanied by advice regulated by the FCA.’” The report suggests a three to six month review period to assess if the existing regulation needs updating for AI. What’s the biggest fear here is that, consumers could wrongly trust information they find in a chatbot with very little knowledge of its reliability or how to interpret it, particularly when the information pertains to sensitive areas such as complex investment products.

A Bigger Risk Behind the Scenes

A Larger Threat Hidden in the Background Beyond what consumers may be risking, there is also another concern among regulators – a concentration risk.

About 81% of financial firms in the world now use AI technologies of some kind. That’s where things could get tricky: Should so many banks, insurance companies and investment firms all rely on just a small number of third-party providers for AI technology, then the potential for a large number of firms to be exposed to the same technical malfunction, security problem, or service outage becomes increasingly plausible. This British review mirrors an international trend of regulators looking at how to manage AI, moving from a focus on the tools themselves as simple productivity enhancers, to how their use is influencing how people spend and invest.

Over the next few months, it may become clear if large language models will join the ranks of other technologies in the regulated financial sector, or be excluded altogether.

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