Millions of people across the UK are turning to generative AI tools such as ChatGPT to help them budget, plan for retirement and make investment decisions.
With regulated financial advice still out of reach for many, in part due to long-standing barriers to wider adoption, these tools offer individuals the opportunity to access tailored guidance within seconds and at little to no cost.
This adoption of technology presents exciting new possibilities for making financial advice more accessible, but it also carries significant risks. Generative AI can sound convincing even when it’s wrong. When it lacks reliable information, it may fill in the gaps or provide outdated or misleading answers that aren’t tailored enough to someone’s specific circumstances. While these tools are rapidly transforming how people make financial decisions, the policy landscape has yet to catch up.
Still solving yesterday’s problem
This month the Government published its landmark National Financial Inclusion Strategy – a welcome step in a policy area long characterised by piecemeal initiatives. However, the strategy remains focused on traditional issues such as barriers to online banking (or even banking in general) and inadequate financial education. These are important challenges, but the reality has evolved beyond these simpler barriers to more complex ones. Amid persistently low levels of financial literacy, many are turning to AI to fill gaps in their understanding, creating significant risks of misinformation and misplaced trust.
There is a danger that this shift could entrench a new form of inequality, where those unable to afford regulated financial advice rely on unregulated tools that can mislead but also offer no clear party to hold accountable when things go wrong.
A focus on firms, not individuals
The Treasury and FCA proposal for a new Targeted Support regime is designed to bridge the gap between general guidance and personalised advice, making professional financial advice more accessible and affordable. However, it overlooks the growing reality that many consumers are now using AI independently to inform their financial decisions, focusing instead on what regulated firms can offer.
The Treasury Select Committee’s inquiry into AI in financial services – which recently held its final oral evidence session, featuring the new Economic Secretary, Lucy Rigby – reflects a similar gap in focus. The Committee is examining how AI is used across the financial services sector and the implications for vulnerable consumers. Yet, while this highlights a clear parliamentary interest in AI in financial services, the attention remains largely on firms’ use of the technology, rather than on how individuals are now using it themselves to make financial decisions.
A new chapter for inclusion, and why now is the time to shape it
While parliamentary debates continue to frame financial inclusion around access – asking who can bank online and who risks being left behind – a new chapter is unfolding. Once online, many people are turning to generative AI tools to make complex financial decisions. When a chatbot becomes the first point of contact for questions about savings, mortgages or debt repayment, new policy questions emerge about the quality of information provided and accountability when things go wrong.
AI has the potential to make financial guidance more affordable and inclusive than ever before. Yet without proper safeguards, it could just as easily deepen existing inequalities. The challenge is not the technology itself, but ensuring regulation keeps pace with how people are using it to make decisions.
Despite growing interest in AI across Westminster, there remains no clear policy or legislative framework addressing individuals who use these tools for financial advice. This is a significant gap that, if left unresolved, could quickly develop into the next major consumer protection crisis and put industry at risk. Banks and insurers could face the fallout of poor financial decisions, while AI and technology companies may come under pressure for tools never intended to offer financial advice.
However, the absence of clear policy direction also creates a rare opportunity for industry leadership. The sector is uniquely positioned to help shape a balanced approach; offering policymakers insight into emerging consumer behaviours, highlighting the risks and opportunities this presents and identifying the kind of framework needed to make the market safe and effective. By engaging proactively with government, industry can help design ethical, transparent and future-proof solutions that close – rather than widen – the advice gap, ensuring innovation becomes a force for inclusion, not inequality.