Football Index customers furious as terms alterations spark market crash

Thousands of customers with money trapped in Football Index, the self-styled “stock market of football”, have reacted with fury to significant changes to the site’s terms and conditions, which prompted the latest in a series of crashes in its market when the site reopened for trading at 7am on Saturday.

The Observer reported in January that Football Index, shirt sponsors of Nottingham Forest and QPR, had suffered a series of price crashes on its exchange, where users can buy and sell “shares” in footballers and receive “dividends” based on their performance.

Related: Football Index clients' money could be trapped after fall in players' share prices

The latest crash is the most significant to date and came after the firm gave its users 28 days’ notice of a dramatic reduction in dividend payments. Trading in shares was suspended before the announcement until Saturday morning, when the price at which most shares in the top 200 players on the index could be sold dived to 1p or 2p, with no sell price at all available for many more.

Liquidity in the market also disappeared, evidenced by a wide gap between the “buy” and “sell” prices of shares, in effect making it impossible for users to retrieve any money from the exchange. The buy price for Bruno Fernandes, one of the most popular players on the exchange, was £1.54 on Saturday evening, down from £7.20 on Friday evening, while his sell price was £1.08.

Football Index’s announcement of a new dividend structure, with the maximum dividend payable reduced from 14p per share to just 3p, was met with a mixture of anger and despair by its users when it was revealed on Twitter on Friday evening.

Users of the site’s forum, meanwhile, have already reported potential losses of up to £32,000 if the site goes out of business, while the Observer is aware of claims by individual users to have as much as £250,000 invested in the exchange, though these are difficult to verify.

Football Index states in its terms that “in the unlikely event of insolvency”, steps have been taken to protect “any cash balance held by an account” although “there is no guarantee that all funds will be repaid”. However, money spent on shares “is not stored in any account or otherwise protected as they are sums at risk”. Since Football Index’s business model means that there is little incentive to leave a significant cash balance on an account, all but a fraction of net deposits on the platform by its customers are unprotected.

A spokesperson for the company said that one of Football Index’s top priorities is customer welfare, and that “as such, our decisions have been guided by a desire to help customers achieve the best outcomes and receive the best possible returns while also having the long-term sustainability of the business front-of-mind”.

The spokesperson also said that “yields had become unsustainably high compared to the level of activity on the platform”, which had made the decision to cut dividends “an unfortunate but necessary one”, adding: “We are aware of growing customer concern, especially among those active on Twitter.

“We would urge anyone concerned about the bets that they have made to get in touch with our customer service team and to refer to the safer gambling resources available on the Football Index website.”