DRN-6285375

The complaint Mr A is unhappy that HSBC UK Bank Plc trading as first direct bank (‘First Direct’) sold his shares when he’d asked them not to. What happened Mr A held shares in a company (Firm S) that he felt very passionately about, due to the research they were carrying out, within his stocks and shares ISA with First Direct. In total he held 400,000 ordinary shares. In early March 2025 Firm S proposed to de-list from the Alternative Investment Market (AIM). And in late March 2025 the proposal was passed. A timeline set out that the last date for dealings on AIM would be 8 April 2025 and then the secondary market trading facility (Asset Match) would commence on 9 April 2025. As First Direct could not hold shares which were not listed, they wrote to Mr A to explain that the shares would be sold automatically unless he told them not to by 1 April 2025. Alternatively, First Direct could issue a share certificate to Mr A in order for him to retain the shares. Mr A let First Direct know that he didn’t want to sell the shares. However, they were sold on 2 April 2025 for 1.015p per share – with Mr A’s account receiving £4,060. On 7 April 2025, when Mr A routinely checked his account, he saw that the shares had been sold. Unhappy, he contacted First Direct to complain. First Direct said they would try to rebuy the shares, but they were unable to. First Direct issued their final response letter on 30 May 2025. They said they had made an error when Mr A contacted them and asked them not to sell his shares. Which meant they were sold on 2 April 2025. Following receipt of Mr A’s complaint First Direct tried to rebuy the shares but there wasn’t enough time. They said they were still looking into a way to rectify things. In June 2025 First Direct emailed Mr A following a discussion with him. They set out that they may be able to purchase a small proportion of the shares back – if they were successful, they would only take cash from his account at the rate the shares had been incorrectly sold for. But that wasn’t possible and so no shares were purchased. Instead, First Direct said they would try to buy back the shares when an auction was held by the secondary market trading facility. However, First Direct then said they were unable to register and bid on shares on Mr A’s behalf – as the shares would then be purchased in their name without the ability to transfer them to Mr A. They offered to provide Mr A with £15,000 plus refund any costs he incurred in repurchasing the shares via auction. An auction never occurred. Mr A remained unhappy and so he referred his complaint to this service. Mr A has explained over a number of submissions to this service how much these shares meant to him. That’s for a few reasons – both financial and emotional as he believed in the aim of Firm S. He explained he wanted to maintain the shares in the company through to completion. He also

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explained he didn’t feel First Direct’s offer to provide him with funds to bid in an auction rectified things as he would need to register and shoulder all the risks associated with the process. In February 2026 Firm S announced they were winding up. They released a statement on their website that explained the trial they were running became unfeasible, alternative study options were also not feasible due to the cost of them. And Firm S were unable to raise the funds needed to continue operating. An investigator considered things, they partially upheld Mr A’s complaint. In summary they said that the loss of capital would always have occurred as Firm S have announced they’re winding down. And so, they didn’t make an award for financial loss in relation to the shares. But, they suggested First Direct pay Mr A £700 compensation to reflect the stress the sale of the shares had caused him. First Direct agreed with the assessment, but Mr A didn’t. In summary, Mr A added the following comments for consideration: • First Direct had time to rebuy the shares when the error was referred to them. • First Direct themselves set the financial loss at £15,000 plus distress and inconvenience. This should be the starting point for this service and should be honoured by First Direct. • The view makes assumptions about the future of Firm S and the outcome if it’s winding down. It’s not possible to yet know what the shares might realise. • Hindsight has been used to absolve First Direct of their obligations at the time. The complaint was passed for an ombudsman’s consideration. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Whilst I have considered everything that has been provided to this service, I don’t intend on commenting on each item. Instead, I will focus on what I have determined are the key aspects of the complaint. When considering what’s fair and reasonable in the circumstances, I need to take account of relevant law and regulations, Regulator’s rules, guidance and standards and codes of practice, and what I consider to have been good industry practice at the time. This includes the Principles for Businesses (‘PRIN’) and the Conduct of Business Sourcebook (‘COBS’). And where the evidence is incomplete, inconclusive or contradictory, I reach my conclusions on the balance of probabilities – that is, what I think is more likely than not based on the available evidence and the wider surrounding circumstances. I don’t need to consider whether First Direct made an error here – because they accept they did. Mr A asked them not to sell his shares in Firm S, but they did. So, the issue to determine is therefore how First Direct ought to put things right. Mr A argues that First Direct had an opportunity to rebuy the shares when he noticed the error. I have been provided with an internal note which sets out that they did try to rebuy the shares – but were unable to. So, I’m satisfied First Direct did try to rectify things once Mr A notified them of the error.

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Mr A has suggested this service should start at a loss calculation of £15,000 – because this is what First Direct assessed the loss to be. First Direct haven’t offered Mr A £15,000 compensation – this was the maximum amount they offered when there was a plan for an auction of Firm S’s shares, to rebuy the shares they incorrectly sold. I think this was a reasonable option to have explored at the time to put things right. However, there is no market for the shares now and so this offer is no longer a viable one. Notwithstanding, rather than holding either party to a previously made offer, it is my role within this complaint to independently review things and determine what I consider to be a fair and reasonable resolution now. In doing so, I must consider what position Mr A would now be in, but for the error that occurred. Mr A has been very clear that he wanted to retain the shares – and so, had First Direct not made an error and sold them, he would have retained them. And so, he would currently own 400,000 shares in Firm S and not have the funds which were released from the sale of the shares. Firm S have entered a wind down process. Their website explains in detail why that decision has been made. It explains that they are unable to finance the trials they were carrying out further. And, they are unable to raise any further funds. The notification explains that Firm S will meet its obligations to its employees, creditors, venders and stakeholders. And update their shareholders in due course. Whilst I agree with Mr A that it’s not possible to yet determine with certainty what shareholders may receive – if anything. I think it’s fair and reasonable based on the status of the firm to conclude that it’s most likely that shareholders will not receive as much as Mr A did for his shares. I say that because the firm has explained it doesn’t have the funds to continue operations and set out it has obligations to parties which will be a priority over shareholders during the process of winding down. Based on everything I consider it most likely that Mr A is in a better financial position now, than he would have been in had First Direct retained the shares. Mr A has said that this view has been reached with hindsight – and that at the time of the sale it wasn’t known what may happen in the future. However, my role in this complaint is to consider how First Direct could put Mr A back into as close to the position he would now be in but for the error. And now, Mr A would hold 400,000 shares in a firm that has announced they are unable to financially continue to trade and so must wind down. So, I consider it most likely he is in a better financial position than he would have been but for the error. It is for this reason that I am not awarding any financial loss. Mr A has provided a detailed description of how the error has affected him and his family. He explained that he was relying on the funds financially. And, whilst First Direct are not responsible for the loss of the money he invested in Firm S, this reliance exacerbated the stress he felt when he realised the shares had been sold. Mr A has been active in trying to rebuy his shares and I can tell that Firm S meant a lot to him. First Direct explored several ways to rebuy the shares. Whilst I think this was the right thing for First Direct to have done, it protracted the contact back and forth between themselves and Mr A. At the time Firm S was at the start of a trial, and I understand Mr A was concerned that there might be a positive outcome, which could have led to an increase in the share prices. It is for all these reasons that I think it is right to award Mr A compensation for the distress he felt realising he no longer owned the shares – and the distress he felt whilst he was communicating with

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First Direct to try to rebuy them. I consider £700 to be fair and reasonable considering these circumstances. Putting things right For the reasons set out above I direct First Direct to award Mr A £700 compensation for the distress and inconvenience suffered. My final decision I uphold Mr A’s complaint and direct HSBC UK Bank Plc trading as first direct bank to award compensation as set out above. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr A to accept or reject my decision before 11 May 2026. Cassie Lauder Ombudsman

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