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 kinds of features were more likely to invest in products beyond their risk appetite.

Alongside its warning to app operators, the FCA has published research that raises concerns that customers using such trading apps are exposed to high-risk investments, and that some appear to exhibit behaviors similar to problem gambling.

Whilst gamification can be used to engage consumers positively, the FCA found it to be used in ways that may mislead consumers or lead to poor outcomes and problem behaviors.

Sarah Pritchard, Executive Director of Markets at the FCA, said:

‘Some product design features could be contributing to problematic, even gambling-like, investor behavior. 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 behavior.’

The FCA intends to 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. The FCA’s 2022 Financial Lives Survey found 9% of all adults with investments have borrowed to invest and 49% of these would not have been able to make the investment without doing so.

To ensure customers are being treated fairly and ahead of the new Consumer Duty coming into force next year, all firms should be reviewing their products now to ensure they are fit for purpose.

Consumer Duty stipulates that firms must design services so that consumers can make effective, timely and properly informed decisions about financial products and services.