Expectations of firms offering fractional shares to retail investors

Read about our expectations under the Consumer Duty for firms offering fractional shares.

This information is about the retail distribution of fractional interests in the publicly traded shares of ordinary commercial companies. This is currently the predominant model of fractional shares in the market. Other models of fractional investing exist and may emerge in the future. These all have their own benefits and risks, and this page has useful information for firms offering different fractional models of investing.


The Treasury recently announced its plan to allow certain fractional share contracts as ISA investments and engagement with stakeholders on implementing this.  

HM Revenue & Customs (HMRC) currently does not consider that fractional shares are eligible for ISAs. This is a longstanding position which it has recently confirmed in guidance. We have reminded firms currently offering fractional shares in ISAs of their obligations to consumers, and consumers who currently hold fractional shares in ISAs should contact their provider if they have any questions. 

The Treasury's announcement provides an opportunity to clarify our expectations of firms offering fractional shares to a retail market under the Consumer Duty, and to set out our next steps in this area. 

The fractional shares market

Investment in fractional shares represents a significant and growing part of the consumer investment market in the UK. 

Fractional shares allow consumers to invest in listed shares at a price point that fits their needs, where the price of a full share may be unaffordable. This allows more consumers to participate in a market and may also enable them to diversify their investment portfolio.

As part of our 2022–2025 strategy, we committed to ensuring consumers can access investments that reflect their risk appetite and receive appropriate information that supports them in making decisions. We want to ensure that consumers receive the right information and benefit from appropriate protections when deciding whether to invest in fractional shares. 

The Consumer Duty

Firms offering fractional shares must act in good faith, avoid causing foreseeable harm, and enable and support consumers to pursue their financial objectives.

Firms should carefully consider whether their fractional share offerings are delivering good outcomes for consumers, in line with the Consumer Duty.  

Some characteristics of fractional share models that firms should consider that may impact consumer outcomes include:  

  • Any limits on transferability (ie where the consumer cannot transfer their investment to another firm) or the consumer’s ability to trade fractional shares. 
  • When fractional share trades will be executed including whether the firm aggregates share orders to whole shares in order to fulfil trades and how this may affect the price for consumers.  
  • What fees and charges consumers will incur, including foreign exchange conversion charges or other fees impacted by trading in shares issued by companies outside the UK.  
  • Whether consumers understand if they will have voting rights or other shareholder rights based on their holdings and how these rights can be exercised.  
  • Whether consumers understand if they will receive dividend income based on their holdings and how this is calculated.  
  • Whether consumers understand their ownership rights to their fractional share holdings, including how investments may be recovered in the event of a firm failure.  

Expectations for firms under the Consumer Duty

See more detailed expectations for firms under the Consumer Duty below. Firms should consider these alongside the characteristics above.

Next steps

We will work closely with the Treasury and HMRC as they develop their proposal to allow certain fractional shares contracts as eligible ISA investments.  

We will consider and appropriately communicate the regulatory treatment of fractional shares and whether the rules that currently apply are proportionate. 

We expect firms to review their practices in line with the information above to ensure they comply with the Consumer Duty.