FCA warns stock trading apps to review game-like designs

By Oliver Smith on Wednesday 23 November 2022

Savings and Investment

Regulator warns that points, badges, leaderboards and celebratory messages might lead to people taking more investing risks.

FCA warns stock trading apps to review game-like designs
Image source: Shutterstock.

The Financial Conduct Authority (FCA) has written to stock trading apps to warn them about the use of gamification or game-like mechanics in their apps.

In particular, the FCA points to examples like falling confetti to celebrate a stock trade, trader leaderboards, frequent push notifications with market news and pre-filling the default amount fields for investing.

It cautions that while these mechanics might encourage more consumer engagement, the FCA also found that they could mislead users or lead to poor outcomes and problem behaviours

“Some product design features could be contributing to problematic, even gambling-like, investor behaviour,” said Sarah Pritchard, executive director of markets at the FCA.

“We expect all firms that offer stock trading to consumers to review and, where appropriate, make improvements to their products based on these findings.”

As well as its warning, the FCA published a new study based on a survey of 3,000 users across four trading apps that used game-like mechanics, and one traditional trading app with no gamification.

The results showed that all four of the ‘gamified’ apps had a higher percentage of customers investing potentially beyond their risk appetite, with two of the apps having nearly 50 per cent of customers trading in this way.

Although the FCA’s report admits that at this stage the research: “does not tell us whether the design features themselves are causing poor outcomes such as investing in products beyond one’s risk appetite.”

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