Not upheld: Service failures generally complaint against Crowdcube Capital Limited

Decision detail

Summary

Mr T complained about a 5% liquidity fee that Crowdcube introduced for secondary sales of his shares in Company A, which he had purchased in 2016. He argued the fee was unjustified, retroactively imposed, and contrary to his original understanding that there would be no exit fees. Crowdcube maintained that secondary sales were a new discretionary service not covered by the 2016 terms, that the fee was clearly disclosed, and that it was proportionate to the work involved. The ombudsman found the complaint not upheld, determining that secondary sales constituted a new service outside the scope of the original investment terms, that Mr T was given clear notice and choice, and that the 5% fee was reasonable and in line with market practice.

The Ombudsman's reasoning

The ombudsman found that secondary sales constituted a new discretionary service not envisaged or covered by the 2016 investment terms, which operated on a transaction-by-transaction basis rather than as ongoing terms. The fee was clearly disclosed before Mr T agreed to participate, placing him in an informed position. The 5% fee was proportionate given Crowdcube's significant involvement in negotiations, legal work, compliance requirements, and investor engagement, and was broadly in line with comparable firms in the market. The fact that an earlier secondary sale had not incurred a fee was not determinative, as market conditions and Crowdcube's service offerings had evolved significantly over the six-year period.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website