Should investors be forced to check their bets?

Should the UK’s retail investors be forced into an affordability check every time they wanted to add, say, a fund to their ISA holding, or to buy shares through their online investing platform account?

I suspect most sane people would utter an irritable “no”, before getting back to their crossword.

For what it’s worth, I’d be firmly in this camp too.

Or, at least, I thought I would be. But a long-running saga currently being played out in the world of horse racing (stay with me on this) is prompting a rethink.

For months, the relationship between the sport of kings, the numerous bookmakers that operate in that sphere, and millions of punters who enjoy a bet on the sport has become increasingly fraught.

The problem centres around the practice of affordability checks. The former Conservative administration tackled this subject in a government white paper last year, whereby bookmakers were required to check on a punter’s financial vulnerability, along with his or her ability to afford their betting.

While well intentioned, the move has caused much anger amongst punters - from professional, large stakes merchants to occasional, recreational players alike.

Despite much talk of “frictionless” checks, an increasing number of punters are being caught up in a web of Kafka-esque administrative requirements, demanding the presentation of passports, bank statements, and other financial paraphernalia to allow them to carry on betting.

For example, the Racing Post recently reported on the experience of one punter, whose losses worked out at just 4p a day, but got caught up in an affordability check nightmare.

Earlier this week, even the chairman of the British Horseracing Authority expressed frustration at how the bookmakers he used were becoming increasingly restrictive with his gambling activities.

Needless to say, such impositions are turning punters away in their droves. Some are turning their backs on the sport altogether, while others are seeking out unregulated parts of the sector to continue placing their wagers.

Neither of these outcomes are particularly satisfactory given that horse racing is a sport that’s funded for the most part by a mechanism linked to (regulated) bookmaking profitability.

Now, you might be one of those people who believes there’s a gulf in difference between gambling and investing (so I’m guessing your name isn’t Boaz Weinstein) and would therefore ask what the above’s got to do with adding a bit of exposure to your equity ISA.

But think about it. Is a scenario so very unlikely that, one day, an investment platform is obliged to ask its customers for proof that they are able to top up their investments to the requested amount, or even to question the thinking behind the investment that’s actually being made?

I’m not sure it is. To be honest, with a bit of hindsight (easily the greatest tool available to investors), I wish in the past I’d been probed a bit more before channelling money into certain investments (shares and funds alike).

Nowadays, before I make an online payment via an app, my bank more or less yells at me to check whether I’m aware of what I’m doing and who it is I’m paying.

But, by the same token, my investing platform allows me to invest in all and sundry, to whatever level, without so much as a sniff of concern.

In an era when financial wellbeing and online support is increasingly paramount, does that sound like a scenario that’s set to last forever?