The FSA is pursuing six firms through the High Court over land bank sales that it suspects are unlikely to be granted planning permission, resulting in investor losses of £45m.
The FSA does not regulate the sale of land but says it will become involved where a land bank firm offers plots of land for sale and offers to arrange planning permission and manage the assets.
This means the firm is likely to be operating as a collective investment scheme and the FSA has powers to act against unauthorised collective investment schemes.
Examples of land being offered for sale include land on 45-degree slopes and on sites of “outstanding natural beauty”, which the FSA says are never going to be given planning permission. The regulator says it is monitoring the activities of 20 land bank firms.
Head of unauthorised business Jonathan Phelan says: “Many of these firms are not authorised so investors should be wary of handing over money.”
Yellowtail Financial Planning managing director Dennis Hall says: “Investors should look at the suitability of the land sale as an investment and the way these investments are being sold.”