The FCA has published a multi-firm review assessing the business models, products and services of trading app firms. The review aims to support new firms and traditional investment brokers seeking to offer such services, and to assist them in understanding their regulatory obligations.
Key findings of the review were:
- Business models
- Some firms act as introducers by directing customers to other platforms or an affiliated firm.
- The FCA encourages firms to fully understand their obligations as both manufacturers and distributors.
- Revenue drivers
- Firms generate income in a variety of ways, including via transaction fees on trades, subscription fees and interested earned on cash balances.
- The FCA noted that some firms might need to reassess whether their pricing structures provide good value for customers.
- Digital engagement practices – all firms demonstrated awareness of the need to use digital features responsibly, including notifications.
- Appropriateness testing – while some firms had good processes for assessing customer understanding of high-risk investments, others lacked adequate checks, potentially exposing customers to unnecessary risks.
Overall, the FCA asks firms to consider the findings of the review when designing trading apps and improving customer protection processes.