Watchdog targets landbanking firm

Investors ploughed hundreds of thousands of pounds into plots of land that had little chance of being built on, the City watchdog has said.

Now the Financial Services Authority (FSA) has taken action against an unauthorised landbanking scheme which collected £3.9m from UK consumers.

But some victims are unlikely to get their funds back.

In the last year, the FSA has secured seven injunctions against unauthorised landbanks.

Action
The High Court has issued a winding-up order against Plott UK Ltd.

The business had been marketing plots of land as an investment opportunity. It promised investors a return of between 200% and 300% on their investment.

However, at least one of the sites was in a designated area of outstanding natural beauty, and so was highly unlikely to ever get planning permission to be built on.

Many customers invested a minimum of £10,000, with some investing hundreds of thousands of pounds. Plott collected £3.9m between May 2009 and April 2011, the FSA said.

The regulator was able to take action as Plott was operating an unauthorised collective investment scheme.

Freeze
Another operation, called European Property Investments UK Ltd, took over Plott's business once the FSA action against Plott began. It accumulated £639,000 in nearly two months from April.


In our experience operators of unauthorised land banking schemes do not work in isolation”

Tracey McDermott
FSA
The FSA was able to freeze £180,000 in the firm's account, but the rest was transferred out before the freezing order was obtained.

Meanwhile, the High Court issued an injunction that means the business will be breaking the law if it sells land or operates the collective investment scheme.

"Consumers are much better off not putting their money into these schemes since, by the time we can catch up with the operators, most of the money has disappeared and investors are left with land that has a value which simply does not reflect the money paid for it," said Tracey McDermott, of the FSA.

"In our experience, operators of unauthorised landbanking schemes do not work in isolation, they often work together and their schemes are evolving.

"Once the dust has settled, we hope to be able to repatriate remaining funds to customers of both companies, but it is likely that some people will not get any of their money back."

Investors are not covered by the Financial Services Compensation Scheme because the businesses were unauthorised.