Not upheld: Account administration errors complaint against Crowdcube Capital Limited

Decision detail

Summary

Mr C complained about a 5% liquidity fee that Crowdcube proposed to charge if he sold his Company R shares through a secondary sale opportunity in December 2024. Mr C argued the fee was unjustified, as he was told at the time of his 2016 investment that there would be no exit fees, and he believed Crowdcube's role was largely administrative. Crowdcube maintained that secondary sales were a new discretionary service introduced years after the original investment, not covered by the 2016 terms, and that the fee was clearly disclosed and comparable to market rates. The ombudsman did not uphold the complaint, finding that the secondary sale was indeed a new service not contemplated in the original agreement, participation was optional, the fee was transparently communicated, and the 5% charge was proportionate to the work undertaken and consistent with market practice.

The Ombudsman's reasoning

The ombudsman concluded that the secondary sale was a new discretionary service not covered by the original 2016 purchase agreement, which related only to the arrangement and purchase of shares. The original terms were silent on secondary sales and exit opportunities. The fee was clearly disclosed before Mr C was required to decide whether to participate, and participation was optional. The 5% fee was comparable to market rates charged by competitors and reflected the significant work undertaken by Crowdcube, including 18 months of negotiations, legal work, compliance requirements, and investor engagement. The fact that an earlier 2018 secondary sale did not involve a fee was not determinative, as secondary sales were not common practice at that time.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website