FCA Product Governance (PROD): What Platforms Must Do When Designing Fractional Real‑Asset Offers

Product governance (PROD) is a section of the FCA Handbook that sets expectations for firms that design, manufacture or distribute financial instruments. At its core, PROD requires firms to define a target market, ensure that product features meet the needs of that market, set appropriate distribution channels and carry out periodic reviews. For fractional real‑asset offers this means the platform must document the intended investor profile, the risks and costs that are compatible with that profile, and the channels through which the product may be sold.

Manufacturers must produce a product governance checklist and distributors must have due diligence processes to ensure the product reaches the identified target market. Recordkeeping and oversight are central: firms must retain evidence of decisions, testing and reviews. PROD intersects with other FCA expectations such as disclosure and fair value; it is not a substitute for suitability or appropriateness assessments where those apply.

For fractional real‑asset funds, PROD obligations push operators to be explicit about liquidity constraints, valuation methodology, cost transparency and whether the product is intended for experienced or retail investors. It also requires ongoing monitoring of outcomes: if actual investor behaviour or outcomes differ from the intended target market, firms must act to remediate distribution or product design.

Retail investors assessing fractional offers should expect clear documentation of the target market, distribution restrictions and evidence of ongoing review. These PROD‑driven processes are intended to increase product‑level accountability and to make it easier for everyday savers to compare whether a fractional fund is designed with their needs and risk appetite in mind.