FSA wins £200k from illegal landbanking scheme in High Court

The Financial Services Authority has secured a High Court decision against an unauthorised land banking firm, and repayment to victims of £200,000.

On 9 December 2011 the FSA secured a summary judgment in the High Court against Cityshore Commodities Limited and its director Aaron Walker.

The judgment confirmed Cityshore sold land illegally to UK consumers.

Mr Justice Peter Smith ordered Cityshore and Walker to make an interim repayment of £200,000 through the FSA, to their victims.

They have also been banned for life from selling land by way of business in the UK.

Earlier this year, as part of the same case, a manager of Cityshore, Ashley Cunningham consented to a similar ban and an order requiring her to pay to the FSA sums received by her for her participation in the business.

Cityshore sold plots of land in Grantham, Lincolnshire, to investors on the promise they would make a significant profit when the land ultimately obtained planning permission and was sold on.

In fact, the land was in an area which meant it was unlikely to gain planning permission.

Cityshore's customers were told by the company's sales staff that they had already applied for planning permission for the land or that they had well-known house-builders lined up to purchase the plots.

In reality, Cityshore had no intention of seeking planning permission or helping purchasers sell their land.

Cityshore was stopped by an initial injunction obtained by the FSA in January 2011 after the firm had made sales of land totaling over £400,000 at a significant profit.

The FSA does not regulate the sale of land but land banking amounts to collective investment, something that requires FSA authorisation. Cityshore was never authorised by the FSA so its land sales were illegal.

Jonathan Phelan, head of retail enforcement said: "Anybody investing in land should always have it independently valued to check its worth.

"If you are ever sold land as an investment, and on the basis that someone else will manage it for you as part of a wider site, you should seek the advice of a firm that is authorised by the FSA."

Since 2008 the FSA has obtained injunctions against eight firms involved in land banking.