Landbanking firm banned and ordered to pay £200k redress by FSA

The FSA has banned landbanking firm Cityshore Commodities from selling land in the UK and ordered the company and its director to make an interim £200,000 repayment through the FSA to its victims.

The regulator secured a summary judgment in the High Court against Cityshore and its director Aaron Walker on December 9.

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

Cityshore sold plots of land in Grantham, Lincolnshire, to investors promising they would make a significant profit when the land 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 sales staff 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 totalling over £400,000 at a significant profit.

The FSA does not regulate the sale of land but landbanking 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 at the FSA, says: “Anybody investing in land should always have it independently valued to check its worth. Furthermore, if consumers are sold land as an investment, and on the basis that someone else will manage it for them as part of a wider site, they should seek the advice of a firm that is authorised by the FSA.”

The FSA first took High Court action against landbanking firm UK Land Investments in 2008. Since then the FSA has obtained injunctions against eight firms involved in landbanking.

In November in a separate case the FSA executed search warrants on nine premises in Kent and Greater London and five individuals were arrested.

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