Question to the Department for Digital, Culture, Media & Sport:

To ask His Majesty's Government what assessment they have made of concerns regarding gambling behaviour associated with investment apps.

Investment apps typically fall under the framework of financial services regulation, rather than gambling regulation, and would not typically be considered as offering a form of gambling. Within the framework of financial services regulation, HM Treasury is responsible for setting the overall legal framework and the Financial Conduct Authority (FCA) is responsible for regulating and supervising the financial services industry. One of the FCA’s primary operational objectives is to secure an appropriate degree of protection for consumers.

The FCA is empowered by legislation to make rules as it considers necessary or expedient to advance its objectives and in 2022, it published research raising concerns about design features in trading apps, including those with game-like elements, and warned stock trading app operators to review their design features. The research noted that some customers appeared to exhibit behaviours similar to harmful gambling. Under the FCA’s Consumer Duty trading apps are explicitly required to pay attention to the needs of customers who may be vulnerable. The Duty also contains an expectation that firms avoid designing features which exploit the behavioural biases of consumers and requires product manufacturers to undertake appropriate testing of their products. In June 2024, the FCA noted that it was keeping trading apps under review over concerns about gamification.

Within the framework of gambling regulation, we are aware of an increase in the number of novel products which blur the line between gambling and other markets such as financial investment. The Gambling Commission has enhanced its licensing approach to novel products and in 2021 strengthened its Memorandum of Understanding with the FCA to ensure effective cooperation. The Gambling Commission has made clear that it will not normally grant a licence to products that use language usually associated with investments or financial products.