FCA warns stock trading apps against gamification

The UK’s Financial Conduct Authority (FCA) has warned stock trading apps against adding gamification elements to their platforms, saying they may cause users to make high-risk investments and lead to gambling-like behaviours.

FCA “concerned about problem behaviours” linked to trading app design

The regulator says gamification can “engage consumers positively” but found it is being used in ways that could mislead consumers or cause poor outcomes.

The warning to review design features such as gamification comes after the FCA surveyed more than 3,000 users across four trading apps. The regulator also included users of a more traditional investment platform as a control. In-depth interviews were also conducted with a sample of 20 users.

The FCA found that points, badges, push notifications and celebratory messages led to users being more likely to invest in products beyond their risk appetite.

Sarah Pritchard, executive director of markets at the FCA, says: “We expect all firms that offer stock trading to consumers to review and, where appropriate, make improvements to their products based on these findings.”

The regulator says 1.15 million new accounts were opened across the four trading app firms in the first four months of 2021, almost double the amount opened with all other retail investment services combined.

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.