Research by the regulator found there was a new, younger, more diverse group of consumers getting involved in higher risk investments, potentially prompted in part by the accessibility offered by new investment apps.

However, there is evidence that these higher risk products may not always be suitable for these consumers’ needs as nearly two thirds (59%) claim that a significant investment loss would have a fundamental impact on their current or future lifestyle.

The research found that for many investors, emotions and feelings such as enjoying the thrill of investing, and social factors like the status that comes from a sense of ownership in the companies they invest in, were key reasons behind their decisions to invest.

The past few months have seen thousands of investors lose money after investing in Gamestop, and gambling on Football Index.

Investors who connected on social media aimed to take on hedge funds by investing in US games retailer Gamestop – but it proved a bumpy ride.

Meanwhile thousands of football fans lost money after betting platform Football Index collapsed. Football Index positioned itself as a ‘stock market’ for football, selling ‘shares’ in players and paying ‘dividends’ on their performance.

Many other investors have bought cryptocurrencies such as Bitcoin, despite a lack of other savings and investments.

Sheldon Mills, executive director for consumer and competition at the FCA, said: “Much of the consumer investments market meets consumers’ needs. But we are worried that some investors are being tempted – often through online adverts or high-pressure sales tactics – into buying higher-risk products that are very unlikely to be suitable for them.

“This research has helped us better understand what drives and motivates consumers so we can tell them about the risks involved in these investments through our investment harm campaign.”

The FCA research found that investors often have high confidence and claimed knowledge. However, it also shows a lack of awareness and/or belief in the risks of investing, with more than four in 10 not viewing ‘losing some money’ as one of the risks of investing, even though as with most investments their whole capital is at risk.

These younger investors may have the lowest levels of financial resilience making them more vulnerable to investment loss.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “The warning from the FCA shows just how concerned it is that the crypto wild west could have a serious impact on the financial stability of consumers who dabble in products they don’t fully understand. The financial watchdog’s research highlights how a new breed of younger investors are getting involved in high risk investments, that could seriously impact their financial stability, partly because they’re being persuaded into it by social media influencers.

“What is a particular warning light in this research is the finding that many investors who put money into high risk products appear to be thrill seekers, investing for a challenge, for competition and for the novelty factor rather than conventional reasons like saving for retirement.”

James McManus, chief investment officer at Nutmeg, said: “The regulator is right to differentiate the practices of responsible investment firms helping people to achieve their financial goals with a long-term investing mindset, from those unscrupulous firms promoting high-risk investments to investors for whom they are unlikely to be suitable.

“In truth, what we’ve seen with the meme stocks’ saga and the extreme volatility in cryptoassets are timely examples of the perils of a short-term approach to investing driven by hype. These moments should act as a clear warning that market noise is often just that and if something sounds too good to be true, it probably is.”