Five arrests made in FSA land banking investigation

The Financial Services Authority has arrested five people over allegations relating to land banking investments sold through a unauthorised collective investment scheme.

Land banking involves the purchase of land with a view to selling it on at a later date for profit, often as a result of planning permission being obtained.

The FSA does not regulate the sale of land but land banking amounts to collective investment, something that requires FSA authorisation.

The regulator, with support from City of London Police, executed search warrants on nine premises in Kent and Greater London, with five people being arrested as a result. Nobody has been charged at this point in connection with the FSA’s investigation.

Earlier this year the FSA stepped up against unauthorised land banking operations, pursuing seven separate cases in the High Court. cases against additional land banking operations

In June, it secured a summary judgment in one of these cases against Stephen Watkins, who traded as Consolidated Land UK.

The judgment confirmed that Mr Watkins sold land illegally to UK consumers and ordered him to make an interim repayment of £920,000, via the FSA, to his victims. Mr Watkins has also been banned for life from selling plots of land.

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

Mr 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. The City regulator claimed that Mr Watkins had “no intention” of seeking permission or helping his purchasers, many of whom paid him their life savings.

Additional reporting by Ashley Wassall