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According to the latest research, AI chatbots have serious accuracy issues when providing financial advice, leading UK consumers to receive misleading tax advice and unnecessary travel insurance recommendations. This study conducted by the consumer organization Which? tested several popular AI tools, including Microsoft's Copilot and ChatGPT, and found that they all advised users to violate HMRC (UK Tax Authority) investment restrictions.
The study found that ChatGPT incorrectly stated that most EU countries require mandatory purchase of travel insurance, while Meta's AI provided incorrect information on how to apply for compensation due to flight delays. Google's Gemini suggested that if a contractor does not work properly, payment can be refused, which Which? warned could put consumers at risk of breach of contract claims.
Which? asked these AI tools 40 questions, and the results showed that many AI answers were concerning in terms of inaccuracy and misleading information, especially when it came to financial and legal issues. Some consumers said they were satisfied with the advice from AI tools regarding credit card usage, investment fees, and appliance shopping. However, 65-year-old Catherine Boyd found that ChatGPT provided outdated code when she asked about self-employment tax issues, leading her to receive incorrect information.
When Which? researchers asked how to apply for a tax refund with HMRC, ChatGPT and Perplexity recommended paid tax refund companies instead of free government services, raising concerns because these companies are known for high fees and false charges.
Additionally, when researchers intentionally placed incorrect information in questions about ISA (Individual Savings Account) limits, ChatGPT and Copilot failed to identify the correct limits, which could lead users to invest beyond the limits and violate HMRC regulations.
In response, the Financial Conduct Authority (FCA) noted that unlike regulated advice, the advice provided by these AI tools is not protected by the Financial Ombudsman Service or the Financial Services Compensation Scheme. In response to the AI companies, Google stated that it remains transparent about the limitations of its generative AI and reminds users to verify information and consult professionals.
Key Points:
1. 💡 Financial advice provided by AI chatbots is often inaccurate and may mislead consumers.
2. 🚨 The study shows that some AI tools recommended paid tax services instead of free government services.
3. ⚖️ Unlike regulated financial advice, the advice from AI tools is not protected by relevant financial protection mechanisms.