Wednesday, March 21, 2012

Land banking companies in UK found guilty of unlawful investment sales

James Maynard of Countrywide Land Holdings faces ban and £32m fine to FSA for unauthorised sales to UK consumers
Financial Services Authority FSA
The Financial Services Authority (FSA) found three land banking companies guilty of unlawfully selling plots of land to UK consumers, and imposed a ban and fines of £33m. Photograph: Clive Gee/PA
Jill Insley, Wed 21 Mar 2012 11.55 GMT
Three land banking companies who sold plots of land unlawfully to UK consumers have been ordered to pay a total of £33m to the Financial Services Authority.
The high court ruled that James Kenneth Maynard, Countrywide Land Holdings Limited (Countrywide) and Plateau Development & Land Limited (Plateau) operated collective investment schemes without authorisation.
Maynard, who operated through the trading names Regional Land and Countrywide, has been banned for life from selling for business purposes in the UK, and has been ordered to pay just under £32m to the FSA. A bankruptcy order has also been made against Maynard, who is believed to be living in Northern Cyprus.
Plateau, which is now in liquidation, was instructed to pay £918,975, while the firm's director Wasim Minhas, has been ordered to pay £75,000.
However, the regulator has warned that victims are unlikely to get any of their money back. Although the FSA is trying to trace the funds paid by investors, it not yet identified any assets that would enable more than a small proportion of these payments to be made, and therefore it is unclear how much will ultimately be returned to investors.
Maynard, Countrywide and Plateau sold plots of land across the UK with the promise that investors would make a significant profit when the land obtained planning permission and was sold. Investors were also told by sales staff that Maynard, Countrywide and Plateau would apply for planning permission for the land or that they had corporate buyers lined up to purchase the sites.
In reality there was no intention to seek planning permission or help buyers sell their land and the plots were in locations unlikely to ever gain planning permission, such as areas of outstanding natural beauty.
The Guardian and Observer warned readers about the risks of investing in land banking as far back as 2006.
The FSA first obtained injunctions against Maynard and Countrywide in August 2010 to freeze assets and stop them from selling more land. But the regulator then discovered that Plateau had been set up subsequently to continue the business. It secured a similar injunction against Plateau in December 2010.
The FSA does not regulate the sale of land, but deemed that land banking amounted to a collective investment which does require its authorisation.
Because these schemes were unauthorised, their victims are not protected by the Financial Services Compensation Scheme.
Tracy McDermott, acting director of enforcement and financial crime at the FSA, said: "We have to be realistic about the low probability of securing meaningful compensation for victims of these scams, but this is still an important victory. Proving that a land bank is operating a collective investment scheme – and should therefore be FSA authorised – is very complicated, so every success puts us in a stronger position to tackle other schemes."
McDermott said the decision should send a clear message to other land banks.
"We have also started court actions against others that we believe have been involved in Maynard's scheme.
"Anybody investing in land should always have it independently valued to check its worth. Furthermore, if you are ever sold land as an investment with the promise of fabulous returns, and on the basis that someone else will manage it for you as part of a wider site, you should check the firm is authorised by us."
Anyone who believes that they may have been contacted by a land banking operation or any other unauthorised financial services provider can call the FSA's consumer helpline for guidance: 0845 606 1234. The regulator has produced a video explaining what land banks are which is available on the FSA website.
Sourced from here.