The Financial Conduct Authority has expressed concerns over the gamification of trading apps.

FCA recently launched an online experiment to test the effect of different digital engagement practices (DEPs) on trading behaviour.

The experiment, conducted with over 9,000 consumers, found that DEPs used by trading apps, such as push notifications and prize draws, can increase trading frequency and risk taking.

It also found evidence that DEPs can have a larger impact on some subgroups including those with low financial literacy, women and younger participants (18-34).

Under the FCA’s Consumer Duty, trading apps must ensure services are designed and tested so they meet consumers’ needs and enable them to make effective, timely and properly informed investment decisions, including for those with characteristics of vulnerability.

The FCA warned stock trading apps to review game-like design features in 2022 ahead of the Consumer Duty’s implementation.

Sheldon Mills, executive director of consumers and competition at the FCA, said: “Trading apps have the potential to transform retail investments, but some in-app features might be pushing consumers towards more frequent or riskier trading, which isn’t right for everyone.

“With usage and popularity of trading apps growing, we’ll be keeping them under review to make sure customers can make investment decisions that suit their needs.”

Some leading direct to consumer investment platforms have welcomed the FCA’s intervention.

Susannah Streeter, head of money and markets, Hargreaves Lansdown, said: “The findings of the FCA are extremely worrying and it’s not surprising the watchdog has put some practices under review.

“Push notifications, gamification and prize draws risk turning trading into a game, when instead the priority should be placed on taking long-term, well thought through decisions to benefit client outcomes and future financial resilience.

“The more established platforms steer clear of such digital engagement practices highlighted by the FCA, and crucially also don’t have chat rooms that can lead to risk decisions based on herd behaviour.”





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