The Financial Conduct Authority (FCA) has warned stock trading app operators to review design features.
According to Finextra, the design features include those with game-like elements, which risk prompting consumers to take actions against their own interest.
Some of the features include sending frequent notifications with the latest market news and providing consumers with in-app points, badges and celebratory messages for making trades.
The FCA has found that consumers using apps with these kind of features were more likely to invest in products beyond their risk appetite.
The FCA has also published research that raises concerns that customers using such trading apps are exposed to high-risk investments, and that some appear to show behaviours similar to problem-gambling.
Whilst gamification can be used to engage consumers positively, the FCA found it being applied in ways that may mislead consumers or lead to poor outcomes.
FCA executive director of markets Sarah Pritchard said, “Some product design features could be contributing to problematic, even gambling-like, investor behaviour. We expect all firms that offer 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 those showing signs of problem gambling behaviour.”
Pritchard added the FCA will do further research into trading app use and design features, in particular to understand some wider financial vulnerabilities for users of these apps, such as whether they borrow to invest and the scale of any losses.
According to the FCA, the measures are among several potential new rules which will protect consumers and improve trust in sustainable investment products. The work forms part of the commitment made in the FCA’s ESG Strategy and Business Plan to build trust and integrity in ESG-labelled instruments, products and the supporting ecosystem.
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