Financial Conduct Authority  

FCA warns against ‘gamification’

FCA warns against ‘gamification’
 

The Financial Conduct Authority has warned against ‘game-like’ elements in stock trading apps, saying some users are exhibiting behaviours similar to problem-gambling.

The regulator today (November 21) warned the operators of the apps to review design features, as those with “game-like elements” risk prompting consumers to take actions against their own interest.

These features include sending frequent notifications with the latest market news, and providing consumers with in-app points, badges and celebratory messages for making trades.

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“[We have] found that consumers using apps with these kinds of features were more likely to invest in products beyond their risk appetite,” the FCA said.

Alongside this warning, the City watchdog published research which it said “raises concerns” that customers using these apps are exposed to high-risk investments.

“Some [consumers] appear to exhibit behaviours similar to problem-gambling,” the FCA said.

The regulator did acknowledge that gamification can be used to engage consumers positively, but warned that it has found it being used in ways that may mislead consumers or lead to poor outcomes and “problem” behaviours.

Executive director of markets at the FCA, Sarah Pritchard, said: “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."

The FCA said it intends to do more research into the use of trading apps and design features, especially focussing on understanding wider financial vulnerabilities of the users of these apps.

“To ensure customers are being treated fairly and ahead of the new consumer duty coming into force next year, all firms should be reviewing their products now to ensure they are fit for purpose,” the FCA said.

sally.hickey@ft.com