UK financial watchdog to launch crackdown on video game-style trading apps
The financial watchdog is planning to clamp down on trading apps that make investment seem like a game.
The Financial Conduct Authority (FCA) said it was ‘concerned’ that some apps giving savers access to the stock market were prompting them ‘to take actions against their own interest’.
This was often because the apps sent frequent notifications with the latest market news, or gave users points, badges and celebratory messages on the app for making trades.
Crackdown: The Financial Conduct Authority said it was ‘concerned’ that some investing apps were prompting savers ‘to take actions against their own interest’
According to the FCA, investors using apps with these features ‘were more likely to invest in products beyond their risk appetite’.
So-called gamification of trading could, in some cases, be used to better engage app users, the FCA said.
But currently, it is being used in ways which mislead customers or lead to problem behaviours, such as addictions.
The FCA’s Sarah Pritchard said: ‘Some product design features could be contributing to problematic, even gambling-like, investor behaviour.
We expect all firms to review and, where appropriate, make improvements to their products based on these findings.’
The use of trading apps has boomed in recent years.
The FCA said 1.15m accounts were opened by customers of four undisclosed trading apps in the first four months of 2021 alone – almost double the amount opened with all other retail investment services combined.