FCA Raises Concerns over Trading Apps with Gambling-like Features

First, it was the hype around crypto and then NFTs. Along with those, the popularity of trading mobile apps increased as well. While some consumers are after a long-term investment and show interest in financial markets, others may treat trading apps just like gambling.

Trading Applications Offering Game-like Features

The financial industry regulator in the UK, the Financial Conduct Authority (FCA), urged operators offering trading via applications to reassess the design of some of their products. The Authority warned that some “game-like elements” may be posing a risk for vulnerable individuals. Such features, the FCA revealed may include different celebratory messages when trading and receiving in-app points or badges. Those functionalities may impact the users negatively as some people “were more likely to invest in products beyond their risk appetite,” the FCA warned.

“The Financial Conduct Authority has warned stock trading app operators to review design features, including those with game-like elements, which risk prompting consumers to take actions against their own interest,“

reads a statement released by the FCA

FCA’s executive director of markets, Sarah Pritchard, acknowledged that some features offered by the trading apps may engage in a behavior that is similar to gambling. She added that the FCA asks stock trading companies to double-check the features they offer, to improve their products and exclude such functionalities. Finally, Pritchard acknowledged that stock trading apps also need to offer support for customers that are showings signs of problem gambling.

“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.“

Sarah Pritchard, executive director of markets at the FCA

FCA to Probe Trading Apps Further

Coinciding with its latest request toward trading companies, the FCA published the results of a new study into trading apps. The study found that the interest in trading apps has skyrocketed recently, which caused a great deal of concern.

According to the Authority’s study, in the first four months of 2021 alone, there were 1.15 million new accounts created by four trading app firms in the UK. This result, the FCA said was “almost double the amount opened with all other retail investment services combined.” With that in mind, the FCA vowed to further investigate the design and use of trading app features in an effort to better understand how those can impact vulnerable individuals.