FSA continues its crackdown on land banking

Watkins sold plots of agricultural UK land, much of which was subject to planning restrictions, for over £11 million and made a very significant profit. He was stopped by an initial injunction obtained by the FSA in 2010.

Watkins’s customers were told by his sales staff that he would seek planning permission for them and also help them to re-sell the land at a profit – a business commonly called land banking. In fact Watkins had no intention of seeking permission or helping his purchasers, many of whom paid him their life savings.

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

Tracey McDermott, the FSA’s acting director of enforcement and financial crime, said

“Yesterday’s judgment was the result of a lengthy FSA investigation involving over a year of litigation against Watkins. We would like to thank the people who came forward to help us with our investigation. Their cooperation and evidence were invaluable and played a key role in yesterday’s decision.

“Anyone thinking of conducting financial services without FSA authorisation should take note. As this and many other recent and ongoing cases show, the FSA is not afraid to mount complex Court proceedings, both criminal and civil, to protect consumers and seek redress from unauthorised persons.

“Anybody investing in land should always have it independently valued to check its worth. Furthermore, 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 an independent financial adviser authorised by the FSA.”

The FSA first took High Court action against a land banking firm – UK Land Investments Limited – in 2008 and most recently obtained a High Court winding-up order against Plott UK Limited, another land banking operation, on 8 June 2011.

The FSA is currently pursuing six other High Court cases against additional land banking operations (having obtained initial injunctions against all of them) and is actively investigating several more.

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.

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