The Financial Conduct Authority has warned stock trading app operators to review their design features over fears that “game-like elements” might induce users into taking more risks than they otherwise would.
These include rewarding users with badges or points for making trades, placing them on leader boards that rank people based on such rewards, and displaying celebratory messages after they have executed a trade.
The FCA is also worried that frequent push notifications with the latest stock market movements, or stock lists that flash red and green to reflect price movements, might lead people to trade in a riskier way.
Though the financial watchdog conceded that gamification can be used to positively engage consumers, FCA research found it is also being used in ways that may “mislead [users] or lead to poor outcomes and problem behaviours”.
The regulator found that one in 27 participants in its survey of over 3,000 app users was classified as having “problem gambling behaviour”, while those who were “at-risk” of problem gambling grew to around one in five.
According to the FCA, being “at-risk” of problem gambling behaviour is correlated with other commonly used indicators of vulnerability, such as low financial resilience and low financial literacy.
Sarah Pritchard, executive director of markets at the FCA, said: “Some product design features could be contributing to problematic, even gambling-like, investor behaviour. 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 behaviour.”
See Also: Ben Goss: The call of (consumer) duty