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FCA agrees £380k landbanking settlement for investors

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The Financial Conduct Authority has agreed a High Court settlement to return around £380,000 to investors in a land bank.

The case concerned St Clair Estates which owned a disused airfield in Winkleigh, Devon, which was divided into separte plots in 2006.

The plots were sold to consumers initially by St Clair Estates Ltd and Elizabeth Fischer, a former director of St Clair and later by OFG Investments, Option Land UK Ltd, GIG Properties Ltd, Mehmet Husnu and Ali Seytanpir. 

The plots were sold with the promise that investors would make a significant profit when the land obtained planning permission and was sold to a developer.

The FCA believes more than 70 investors were sold plots of land paying between £6,000 and £12,000 for each individual plot of land with total sales of £2,209,296.

In agreeing to the settlement, St Clair Estates and Elizabeth Fischer accepted they had run an illegal land bank by operating a collective investment scheme without FCA authorisation.

OFG Investments, Option Land UK, GIG Properties, Mehmet Husnu and Ali Seytanpir agreed to pay the full amount of the FCA’s claim.

They also accepted an FCA restraining order which prevents them from operating any other collective investment scheme or being involved in a similar business selling land.

The FCA began the court battle against the firms and individuals in December 2011. The regulator obtained a court order freezing the bank accounts of the companies and individuals involved and injunctions preventing them from selling more land to investors.

The settlement will result in payment of approximately £380,000 from frozen bank accounts to the FCA.

The FCA will then seek an order from the High Court to pay this sum to investors. The defendants’ assets will remain frozen until the terms of the settlement have been complied with.

FCA enforcement and financial crime director Tracey McDermott says: “While investors will only get a fraction of their money back, the settlement represents a better outcome than would have been achieved for consumers if the FCA had fought the case all the way to a final hearing.

“It underlines the FCA’s commitment to achieving the best outcome for consumers, but is something of a bittersweet outcome. 

“Unauthorised collective investment schemes continue to represent a major source of loss for consumers. Consumers should therefore continue to be acutely aware of the huge risks involved when investing money with unauthorised businesses given that the prospects of getting any money back are always slim.”

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. In agreeing to the settlement, St Clair Estates and Elizabeth Fischer accepted they had run an illegal land bank by operating a collective investment scheme without FCA authorisation
    But who is paying for the work the FCA put in to sort all this out? Is it authorised firms?
    How much did the lawyers make?
    why is this an FCA matter and not a police matter.
    Why do we end up paying for everything that goes wrong in this country when it is as far removed from our days work as you could possibly get?

  2. RegulatorSaurusRex 21st June 2013 at 3:33 pm

    Anonymous 1:44 pm

    The regulator is empowered to prosecute people who run regulated collective investment schemes without authorisation.

    Do you understand now?

  3. @R S R
    I understand all right.
    I do not think we should pay for it though.
    This should be funded by the state.
    Do Doctors pay compensation to patients if someone is caught posing as a GP or Surgeon, when in fact they have no qualifications?
    We will be paying dog wardens next.
    All the s@@t is our fault it seems

  4. I thought the whole point of being regulated is to protect the investor. Now it seems that you can deal with someone unregulated, indeed a criminal, and still be protected. Surely this is a police matter. If they were not authorised why is the FCA paying compensation? If they were not authorised why did people invest with them? We really are going have to stop protecting greedy people from themselves. Whether it’s IFAs or taxpayers we can no longer afford it. Let’s get back to caveat emptor!

  5. If one reads the article correctly, one will see it isn’t the FCA making the payment. The illegal landbanking operation had their accounts frozen and that seems to be the main reason the operators have agreed to pay the FCA. I am a landbanking victim and do not regard myself as greedy, I do admit to being trusting though. I was able to purchase my plots because I downsized!

  6. @Gillybobs
    The FCA may not be making the payment but it will have cost a fortune to pursue this. That is where the FCA costs come in.
    You may not consider yourself greedy but you surely have a duty to make sure that those you do business with are authorised.

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