In an online experiment with over 9,000 consumers, the FCA found that digital engagement practices (DEPs) used by trading apps, such as push notifications and prize draws, can increase trading frequency and risk taking.

In an FCA first, the regulator built an experimental trading app platform to test the effect of different DEPs on trading behaviour. 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.’

The FCA continues to educate consumers about making better investment decisions and understanding the opportunities and risks, through its InvestSmart campaign. It has also brought charges against ‘finfluencers’ promoting financial products on social media.