Not upheld: Investment mis-selling complaint against Crowdcube Capital Limited

Decision detail

Summary

Ms C complained about a 5% liquidity fee that Crowdcube proposed to charge if she sold her Company R shares through a secondary sale opportunity in December 2024. Ms C argued the fee was unjustified, excessive, and contrary to her original 2016 investment terms which she believed included no exit fees. 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 optional. The ombudsman found the complaint not upheld, determining that the secondary sale constituted a new transaction with separate terms, the fee was proportionate given Crowdcube's substantial involvement in facilitating the transaction, and the charge was comparable to market rates.

The Ombudsman's reasoning

The ombudsman found 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. As a new transaction, the secondary sale operated on different terms, and Ms C was not compelled to participate. The fee was clearly disclosed before Ms C decided whether to sell, allowing her to make an informed decision. The 5% fee was proportionate given Crowdcube's significant involvement (18 months of negotiations, legal work, compliance, and investor engagement) and was comparable to fees charged by competitor firms in the market. The fact that an earlier 2018 secondary sale did not involve a fee 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