Not upheld: Other regulated complaint complaint against Crowdcube Capital Limited

Decision detail

Summary

Mr F complained about a 5% fee charged by Crowdcube when he sold shares in Company A through a secondary sale opportunity in December 2024. He argued the fee was unjustified, disproportionate, and opportunistic, and that it breached the Consumer Rights Act 2015 and Consumer Duty rules, particularly since he was told at the time of original investment in 2016 that there would be no exit fees. Crowdcube argued that secondary sales were a new discretionary service introduced years after the original investment, that the fee was clearly disclosed and optional, and that it was comparable to market rates. The ombudsman found the complaint not upheld, concluding that the secondary sale was a new service not covered by the original 2016 terms, Mr F was given clear notice and had the option not to proceed, and the 5% fee was reasonable given the significant work undertaken and was comparable to competitor fees.

The Ombudsman's reasoning

The ombudsman concluded that the secondary sale was a new discretionary service not contemplated by the original 2016 purchase agreement, which only covered the arrangement and purchase process. The original terms operated on a transaction-by-transaction basis rather than providing ongoing terms for all future services. Mr F was given clear notice of the 5% fee before agreeing to participate in the optional secondary sale, placing him in an informed position. The fee was comparable to market rates charged by competitors and Crowdcube provided evidence of significant work undertaken including 18 months of negotiations, legal work, compliance requirements, and investor engagement. The Consumer Duty does not require fees to align only with direct costs or act as a price cap, and percentage-based fees are a common method in investment services. The fact that no fee was charged for an earlier 2018 secondary sale was not determinative, as market conditions and Crowdcube's service offerings had evolved significantly over six years.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website