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Stock trading apps are littered with features that could potentially lead users towards problem gambling behaviour, according to the UK’s Financial Conduct Authority (FCA).

The regulator – which oversees the fiscal conduct of more than 50,000 businesses in the UK – discovered that certain features were more likely to encourage consumers to invest in products beyond their risk appetite.

These UX features included sending out frequent notifications with the latest market news, as well as providing customers with in-app rewards or celebratory messages for trades.

Gamification was listed as a core concern. The FCA said it was being used in ways that could mislead consumers or lead to poor outcomes – and even problem gambling behaviour.

“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.

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

“They should also ensure they are providing support to their customers, particularly those in vulnerable circumstances or those showing signs of problem gambling behaviour,” she added.

The FCA has committed to further research into trading apps and their design features to further understand the vulnerabilities of users on these apps.

Popular stock trading apps in the UK include Freetrade, eToro and IG. US-based apps like Robinhood have simplified mobile stock trading for recreational investors. They soared in popularity during the Covid-19 pandemic and have continued to benefit from the volatile market situation.

Robinhood was slated to launch in the UK in 2020, but the launch was postponed indefinitely in July of that year due to uncertainty caused by the pandemic.

The FCA’s 2022 Financial Lives Survey concluded that 9% of all adults with investments had borrowed to invest, while nearly half (49%) of these would not have been able to make the investment without doing so.

The FCA has instructed all relevant firms to review their products to ensure they are fit for purpose.

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