The UK’s financial watchdog has fired a warning shot at trading apps today over the so-called gamification of betting on the financial markets, amid fears unsophisticated investors are being lured in to bets against their own interest.
In a statement, the Financial Conduct Authority warned trading app operators to review design features including sending “frequent notifications with the latest market news” and providing investors with “in-app points, badges and celebratory messages”.
The warnings come after fears on both sides of the Atlantic that retail investors are being prompted into speculative bets without understanding the ramifications.
US trading platform Robinhood, which used prompts like confetti sprinkling on screen when trades were placed, was among the most high-profile firms to be hit by allegations after it emerged a 20-year old-customer committed suicide for mistakenly believing a leveraged bet had put him $730,165 in the negative. The case prompted the firm to tighten its guardrails for customers.
The FCA said today it had found gamification “being used in ways that may mislead consumers 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.”
She added that firms should ensure they are supporting customers, particularly “those in vulnerable circumstances or those showing signs of problem gambling behaviour.”
The FCA said it intends to do further research into trading app use and design features, in particular to understand “wider financial vulnerabilities for users of these apps, such as whether they borrow to invest and the scale of any losses.”
For all the latest Lifestyle News Click Here
For the latest news and updates, follow us on Google News.
