Unregulated financial advice is causing harm
80% of people admit to having used an unregulated financial advice provider for information about a financial product.
Mainly AI tools and Social Media.
On top of this only 25% of people said that they would check who was providing the advice or whether they were part of a commercial group looking to make money from the “free” advice.
Despite over 1 million people saying they had lost money from these sources of unregulated online advice and scams last year with £1.2 billion being lost.
Only recently for example, the Advertising Standards Authority (ASA) clamped down on two online trading companies for producing misleading adverts. In both cases their adverts did not contain standard financial risk warnings because the companies claimed to be providing an education service to help people understand how to trade investments, rather than an investment trading service itself. The ASA did not see it that way. But it goes to show how online adverts can be subtly manipulated to make you think that you are not at risk when you are.
AI risks
Research by Pension Bee for example, found that at least 10% of unregulated financial advice from AI was harmful.
They didn’t necessarily find that the answers being provided were wrong. Just that they often left out key information which would be really important to someone making a financial decision. As the questions being asked become more technical and complicated, the likelihood of inaccurate and incorrect answers increases. In some cases, to as high as 99%.
The latest analysis by Lang Cat found that 25% of people had asked AI for help with financial advice in the last two years. They estimate that over 350,000 people could be investing based on what AI has told them. The value of those investments could be as high as £45 billion.
A survey by Plum money ranked the ways in which people want to access financial advice. Advisors are still #1 but only just. The list was as follows:
- Adviser 19%
- AI 18%
- Bank 16%
- Google 16%
- Family 15%
- Social Media 1%
The people surveyed obviously weren’t those losing money from Social Media adverts.
People are also losing money from self-investing of course. Which is often one of the reasons ton search AI. In order to get answers to questions about investing yourself. This is borne out by the increased number of complaints to the Financial Ombudsman Service (FOS) in the last quarter. With some of the highest complaint numbers being about self-serving investment companies like Hargreaves Lansdown and Interactive Investor.
So how do we deal with people using and more importantly trusting AI models for unregulated financial advice?
The Financial Conduct Authority certainly has a role to play in this and needs to intervene quickly. It has just now (19/10/26) said that it wants AI firms to add signposts to their advice letting consumers know that their investments are at risk of going up or down and that AI is offering no consumer protection. Is that far enough?
It’s
Use a local financial adviser
As advisers we offer both a free initial meeting and a free pension review to help people understand their financial needs without being charged.
With figures showing that 90% of family wealth is lost by the third generation (that’s your grandchildren) the value of taking financial advice now cannot be overstated.
There are lots of ways you can pass on your wealth in a structured and protected way which means that it will be protected from the kinds of losses we see from unregulated advice.
Get More Information.
If you would like to speak to a qualified and regulated financial adviser, then why not contact Christina today. We offer a free initial meeting to discuss your requirements and explain how our service works. You are under no obligation to use us after that if you don’t want to and we won’t pester you.
So why not call us today on 01282 614444 or e mail us enquiries@ccfps.co.uk or use our contact form online.
Or if you’d prefer to think about it some more, why not have a look at our Facebook page, our Vouched For page, or our Testimonials page to see what our customers think about us.
