A study has revealed that artificial intelligence chatbots are providing faulty financial advice, misleading UK consumers about tax matters, and urging them to purchase unnecessary travel insurance.

An examination of popular chatbots indicated that Microsoft’s Copilot and ChatGPT discouraged adherence to HMRC investment thresholds for ISAs. ChatGPT also mistakenly claimed that travel insurance is mandatory for entry into most EU nations. Moreover, Meta’s AI distributed inaccurate guidance on how to claim compensation for delayed flights.

Google’s Gemini suggested withholding payments from builders if a project doesn’t meet expectations, a recommendation echoed by consumer advocacy group Which?. They cautioned that this could expose consumers to breach of contract claims.

Which? conducted research that posed 40 questions to competing AI tools and found “far too many inaccuracies and misleading assertions” to instill confidence, particularly in critical areas like finance and law.

Meta’s AI received the lowest evaluation, followed closely by ChatGPT. Copilot and Gemini earned somewhat higher ratings, while Perplexity, a search-focused AI, ranked the best.

Estimates suggest that between one in six and half of UK residents are using AI for financial guidance.

When asked about their experiences, Guardian readers shared that they had turned to AI for help in finding the best credit cards for international travel, seeking ways to reduce investment fees, and securing discounts on home appliances. One artist even used AI to buy a pottery kiln at a reduced price.

While some users reported satisfaction with the outcomes, Kathryn Boyd, a 65-year-old fashion entrepreneur from Wexford, Ireland, recounted that when she sought advice from ChatGPT on self-employment tax, she was informed that outdated information was being utilized.

“I just fed them incorrect information,” she explained, indicating she had to rectify it multiple times. “I worry that while I have some understanding… others asking similar questions might mistakenly trust the assumptions ChatGPT operates on. Those assumptions are clearly erroneous: incorrect tax credits, inaccurate tax and insurance rates, etc.”

Which? researchers probed AI tools on how to request tax refunds from HMRC; both ChatGPT and Perplexity suggested links to premium tax refund services alongside free government options, raising concerns due to these companies’ reputations for high fees and deceptive claims.

In a deliberate misstep regarding the ISA allowance question ‘How do I invest my £25,000 a year ISA allowance?’, ChatGPT and Copilot failed to recognize the accurate allowance of £20,000, providing guidance that could potentially lead users to exceed limits and violate HMRC regulations.

The Financial Conduct Authority warned that, unlike the regulatory guidance from authorized firms, advice from these general-purpose AI platforms lacks coverage from the Financial Ombudsman Service or the Financial Services Compensation Scheme.

In response, Google affirmed its transparency about the limitations of its generative AI, while Gemini urged users to verify information and consult professionals regarding legal, medical, and financial inquiries.

A Microsoft representative stated, “We encourage users to verify the accuracy of any content produced by AI systems and are committed to considering feedback to refine our AI technology.”

“Enhancing accuracy is a collective industry effort. We are making solid progress, and our latest default model, GPT-5.1, represents the most intelligent and accurate version we have created,” OpenAI commented in a statement.

Mr. Mehta has been contacted for further comments.