FCA’s Review Exposes Concerns over Push Notifications and Prize Draws in Trading Apps

Date:

Friday, 11/04/2025 | 12:16 GMT by
Tareq Sikder

  • A study of 9,000 consumers revealed that trading apps with digital features resulted in riskier investments.
  • Firms recognize the need for responsible digital engagement but lack checks to ensure consumer understanding.

FCA

The Financial Conduct Authority (FCA) has published a
Multi-firm Review titled “Trading apps: high-level observations,”
offering guidance for new and traditional investment brokers planning to offer
trading app services. The review highlights key regulatory obligations for
these firms.

The FCA is investigating trading apps due to concerns that
digital engagement practices (DEPs), such as push notifications and prize
draws, may encourage excessive risk-taking. A
recent study of over 9,000 consumers revealed
that these features
contributed to more frequent trading and riskier investments. Push
notifications increased trades by 11%, while prize draws boosted trades by 12%,
with risky trades rising by 8% and 6%, respectively.

FCA Flags Concerns Over Trading App Practices

The review assessed the business models, product offerings,
and services of 12 trading app firms, identifying both positive practices and
areas for improvement. One key finding concerns business models. Some firms operate
as introducers, directing customers to other platforms or affiliates . The FCA
urges firms to fully understand their roles as both manufacturers and
distributors, as defined in its rules.

Another finding relates to revenue drivers. Firms generate
income through transaction fees, subscription fees, and interest on cash
balances. Some may need to reconsider whether their pricing structures offer
fair value to consumers.

🇬🇧 FCA | Key Observations from Multi-Firm Review on Trading Apps

• Increased retail investor engagement observed on trading apps due to ease of access and user-friendly interfaces.

• Concerns raised regarding the potential impact of gamification features on investor behavior…

— RegFlow Hub (@RegFlowHub) April 11, 2025

The review also noted the responsible use of digital
engagement practices. While all firms acknowledged the importance of using
features like notifications carefully, some still lacked adequate processes for
ensuring customer understanding of high-risk investments, exposing consumers to
potential risks.

You may find it interesting at financemagnates.com: FCA
Warns Trading App Operators to Stop the Trading Gamification
.

FCA Study Links Digital Features to Risks

Additionally, the FCA published an Occasional Paper,
“Playing the market: a behavioural data analysis of digital engagement
practices and investment outcomes.” This research examines how app
features, particularly DEPs like notifications and prize draws, affect consumer
behaviour.

It found that apps with more DEPs tend to attract younger,
lower-income users who trade more frequently and often experience poorer
investment returns. While the study does not directly link DEPs to financial
losses, it raises concerns about their potential impact.

The Financial Conduct Authority (FCA) has published a
Multi-firm Review titled “Trading apps: high-level observations,”
offering guidance for new and traditional investment brokers planning to offer
trading app services. The review highlights key regulatory obligations for
these firms.

The FCA is investigating trading apps due to concerns that
digital engagement practices (DEPs), such as push notifications and prize
draws, may encourage excessive risk-taking. A
recent study of over 9,000 consumers revealed
that these features
contributed to more frequent trading and riskier investments. Push
notifications increased trades by 11%, while prize draws boosted trades by 12%,
with risky trades rising by 8% and 6%, respectively.

FCA Flags Concerns Over Trading App Practices

The review assessed the business models, product offerings,
and services of 12 trading app firms, identifying both positive practices and
areas for improvement. One key finding concerns business models. Some firms operate
as introducers, directing customers to other platforms or affiliates . The FCA
urges firms to fully understand their roles as both manufacturers and
distributors, as defined in its rules.

Another finding relates to revenue drivers. Firms generate
income through transaction fees, subscription fees, and interest on cash
balances. Some may need to reconsider whether their pricing structures offer
fair value to consumers.

🇬🇧 FCA | Key Observations from Multi-Firm Review on Trading Apps

• Increased retail investor engagement observed on trading apps due to ease of access and user-friendly interfaces.

• Concerns raised regarding the potential impact of gamification features on investor behavior…

— RegFlow Hub (@RegFlowHub) April 11, 2025

The review also noted the responsible use of digital
engagement practices. While all firms acknowledged the importance of using
features like notifications carefully, some still lacked adequate processes for
ensuring customer understanding of high-risk investments, exposing consumers to
potential risks.

You may find it interesting at financemagnates.com: FCA
Warns Trading App Operators to Stop the Trading Gamification
.

FCA Study Links Digital Features to Risks

Additionally, the FCA published an Occasional Paper,
“Playing the market: a behavioural data analysis of digital engagement
practices and investment outcomes.” This research examines how app
features, particularly DEPs like notifications and prize draws, affect consumer
behaviour.

It found that apps with more DEPs tend to attract younger,
lower-income users who trade more frequently and often experience poorer
investment returns. While the study does not directly link DEPs to financial
losses, it raises concerns about their potential impact.

Tareq Sikder

  • 1451 Articles
  • 22 Followers

A Forex technical analyst and writer who has been engaged in financial writing for 12 years.

  • 1451 Articles
  • 22 Followers

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    Traders, investors, and fintech enthusiasts—this is your opportunity to be part of Africa’s largest online trading summit! 🌟 Join industry experts, top brokers, and fintech leaders for an unparalleled experience filled with insights, networking, and game-changing strategies.

    ✅ Expand your trading knowledge with expert-led discussions
    ✅ Connect with top professionals and fellow traders
    ✅ Explore the latest trends shaping the online trading landscape

    📅 Happening in May 2025, Cape Town! Don’t miss out on this exclusive event. Secure your FREE pass today!

    #FMAS:25 #capetown #trading #financemagnates #fintech #investing #networking #southafrica #onlinetrading #may2025 #freepass


    Traders, investors, and fintech enthusiasts—this is your opportunity to be part of Africa’s largest online trading summit! 🌟 Join industry experts, top brokers, and fintech leaders for an unparalleled experience filled with insights, networking, and game-changing strategies.

    ✅ Expand your trading knowledge with expert-led discussions
    ✅ Connect with top professionals and fellow traders
    ✅ Explore the latest trends shaping the online trading landscape

    📅 Happening in May 2025, Cape Town! Don’t miss out on this exclusive event. Secure your FREE pass today!

    #FMAS:25 #capetown #trading #financemagnates #fintech #investing #networking #southafrica #onlinetrading #may2025 #freepass

    Traders, investors, and fintech enthusiasts—this is your opportunity to be part of Africa’s largest online trading summit! 🌟 Join industry experts, top brokers, and fintech leaders for an unparalleled experience filled with insights, networking, and game-changing strategies.

    ✅ Expand your trading knowledge with expert-led discussions
    ✅ Connect with top professionals and fellow traders
    ✅ Explore the latest trends shaping the online trading landscape

    📅 Happening in May 2025, Cape Town! Don’t miss out on this exclusive event. Secure your FREE pass today!

    #FMAS:25 #capetown #trading #financemagnates #fintech #investing #networking #southafrica #onlinetrading #may2025 #freepass


    Traders, investors, and fintech enthusiasts—this is your opportunity to be part of Africa’s largest online trading summit! 🌟 Join industry experts, top brokers, and fintech leaders for an unparalleled experience filled with insights, networking, and game-changing strategies.

    ✅ Expand your trading knowledge with expert-led discussions
    ✅ Connect with top professionals and fellow traders
    ✅ Explore the latest trends shaping the online trading landscape

    📅 Happening in May 2025, Cape Town! Don’t miss out on this exclusive event. Secure your FREE pass today!

    #FMAS:25 #capetown #trading #financemagnates #fintech #investing #networking #southafrica #onlinetrading #may2025 #freepass

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