TISA warns FCA of missed opportunity to modernise advice framework and prevent consumer harm from unregulated AI tools

TISA warns FCA of missed opportunity to modernise advice framework and prevent consumer harm from unregulated AI tools

May 22, 2026

TISA has warned that the FCA risks missing a major opportunity to modernise the UK's advice framework and avoid widespread consumer harm, with current proposals failing to grapple with concerning realities posed by unregulated AI tools.

In its response to the FCA's consultation on simplifying the pensions and investment advice rules, TISA welcomed the FCA's commitment to making suitability reports and disclosures more accessible but urged action to safeguard consumers and industry from unregulated AI tools, which are conducting unauthorised financial activity without appropriate guardrails.

Sophie Legrand-Green, Head of Policy: Consumer Protection & Access, commented:

"The growth of unregulated AI advice-like services can be a fantastic tool to democratise financial information and support. These tools are already resetting consumer expectations and shaping financial decisions, but consumers may be acting on unsuitable recommendations with no clear accountability, suitability assessment or route to redress. We urge the FCA to work with AI providers to build appropriate guardrails and signposts into LLMs, warning users about their limitations and the lack of regulatory protection and directing consumers to reliable, regulated forms of support and advice.

The FCA must also confront the market as it is. Unregulated, free AI tools risk undermining regulated advice and Targeted Support by offering personalised-sounding answers at scale, while regulated firms remain constrained by rules that make new advice models commercially difficult. If the advice-guidance boundary is to be policed, it must be policed consistently. If that is not possible, regulated firms need a framework that allows them to compete safely and serve consumers at scale."

TISA warns that regulated firms cannot compete fairly with these AI services while current charging and qualifications requirements continue to limit the commercial viability of new advice propositions.

Without a more ambitious approach, TISA said the reforms are unlikely to close the advice gap or significantly increase the number of consumers receiving regulated financial advice, while also undermining the success of regulated forms of advice and Targeted Support.

In response, TISA is calling for the FCA to:

• Work with big tech and AI providers to introduce appropriate guardrails into unregulated AI tools, including clear warnings on the limits of responses, lack of regulatory protection and signposting to regulated forms of advice and support.
• Police the boundary between regulated and unregulated advice consistently, so the same standards apply where consumers are receiving advice-like outputs.

If the FCA is unwilling or unable to police the boundary, TISA recommends levelling the playing field by:

• Reviewing charging rules that prevent regulated firms from offering new, free of charge advice services where appropriate consumer protections are in place.
• Providing further practical guidance on qualifications requirements so firms can develop scalable advice propositions with confidence.

ENDS.

Notes to editors

• A full copy of the consultation response is available on request.
• TISA is a not-for-profit membership organisation committed to improving the financial wellbeing of all UK consumers by working collectively with the financial services industry to deliver solutions and champion innovation, for the benefit of people, our industry, and the nation.
• TISA has approximately 260 member firms involved in the supply and distribution of savings and investment products and associated services. Members include the UK's major investment managers, retail banks, online platforms, insurance companies, pension providers, distributors, building societies, wealth managers, third party administrators, FinTechs, financial consultants, financial advisers, industry infrastructure providers and stockbrokers.