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Summary

The FCA has warned stock trading app operators to review design features such as game-like elements which risk prompting consumers to take actions against their own interests.

Such features include sending frequent notifications highlighting the latest market news and providing consumers with in-app points, badges, and celebratory messages for making trades. The FCA found consumers using apps with these types of features were more likely to invest in products beyond their risk appetite.

The regulator has also published research which raises concerns that customers using such trading apps are exposed to high-risk investments, and that some appear to exhibit behaviours similar to problem-gambling.

While gamification can be used to engage with consumers positively, the FCA found it was being used in ways that could mislead consumers or lead to poor outcomes and problem behaviours.

FCA executive director of markets Sarah Pritchard said ‘Some product design features could be contributing to problematic, even gambling-like, behaviour. We expect all firms offering stock trading to consumers to review and, where appropriate, make improvements to their products based on these findings. They should also ensure they are providing support to their customers, particularly those in vulnerable circumstances or showing signs of problem gambling behaviour.’

The FCA intends to undertake further research into trading app use and design features to understand the wider financial vulnerabilities for users of these apps, such as whether they borrow to invest, and the scale of any losses. The FCA’s 2022 Financial Lives Survey found that 9% of adults with investments have borrowed to invest, while 49% of these would not otherwise have been able to make the investment.

To ensure customers are being treated fairly, ahead of the new Consumer Duty coming into force next year, the FCA said, all firms should review their products to ensure they are fit for purpose. The Consumer Duty stipulates that firms must design services so that consumers can make effective, timely and properly informed decisions about financial products and services.

Links: https://www.fca.org.uk/news/press-releases/fca-concerned-about-problem-behaviours-linked-trading-app-design

https://www.fca.org.uk/publications/research/gaming-trading-how-trading-apps-could-be-engaging-consumers-worse