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Land banking fraud case costs FCA £2.5m

A land banking fraud case brought by the FCA which has been frustrated by the cuts to legal aid has cost the regulator £2.5m.

In May, a judge threw out the case after the five defendants failed to get legal representation, ruling they would not be given a fair trial. Later that month, however, the decision was overturned by the Court of Appeal.

A Freedom of Information request, published on the FCA website, shows the case has so far cost the regulator £2.5m. This includes a cost of £23,800 for external counsel for bringing the appeal.

In April 2013 the FCA charged eight men with land banking fraud and carrying out a regulated activity without authorisation.

The offences relate to the period between August 2008 and November 2011 and arise out of Operation Cotton, an FCA investigation into land banking firms.

The case was classified as a “very high-cost case”, meaning the trial was expected to last over 60 days. The Government has introduced a 30 per cent cut to fees paid to solicitors and barristers for VHCCs as part of plans to cut £220m from the £2bn annual legal aid budget.

Following the Court of Appeal decision, the defendants will seek representation ahead of a potential trial date in January 2015.

The defendants have already approached 70 sets of chambers without success, and appeal judge Sir Brian Leveson said the case may still be thrown out if representation cannot be found.


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There are 8 comments at the moment, we would love to hear your opinion too.

  1. So when you say it has cost the FCA money?

  2. Have I got this right?

    Even if the defendants get representation and the case proceeds – there will be more costs falling on the FCA (and the Taxpayer). What is the potential return to the Regulator? Zilch I would have thought, seeing as the defendants are seeking legal aid.
    So in effect the Regulator is wasting our money. If this is a criminal offence then the DPP should be prosecuting – not the Regulator who relies on our subscriptions.

    Or am I entirely wrong?

  3. I am confused as well Harry..the article states ‘In April 2013 the FCA charged eight men with land banking fraud and carrying out a regulated activity without authorisation.’

    Does the FCA have the power to charge anyone with fraud? I would have thought that this power falls under the mandate of the CPS?

    Much as I agree with the need to bring such people to justice, I don’t see that our industry needs to pay for prosecutions where fraud has been identified.

  4. I don’t understand what difference it makes if the defendants can’t secure legal aid. Is the prosecution of a bank robber or an embezzler frustrated by the fact that he can’t get legal aid for his defence? Fraud is fraud FFS.

  5. Error – Not DPP – CPS?

  6. Positive deterrence – you make an example of the defendants and send a message to the market and consumers that land-banking is a shoddy investment thus saving mrs Miggins pension pot in the future…providing they win of course.

  7. I do wonder about the phrase “positive deterrence” ?

    Is life in jail for murder a “positive deterrence” ? I would say not we get murders every single day !
    Was hanging a “positive deterrence” not from what the history books tell us !

    So by bringing about (at huge expense) a guilty verdict on the 6 in question by the FCA resulting in a jail term, fine or both, would this really stop ? simple answer no the future feckless just get smarter to avoid and cover their tracks and continue with said frauds. My view is take away the fuel and the car wont crash !!

    I’m not saying the FCA or the CPS should shrug their shoulders and shout “cest la vie” these people should be brought to justice if they are guilty, but the regulators should stop these things from even happening in the first place not when every-one has lost their life savings !!

    You either ban out right un-regulated advice and products or you advertise (mass market)
    the merits of regulation both advisers and products, and the consequences of un-regulated advice and products, deterrent to me is past tense (its happened be warned) why not warn them up front like fag packets, drink, and drugs; un-regulated products and advice can seriously damage your wealth !!!

  8. Banning outright unregulated advice and products would mean regulating (and thus defining and creating a set of rules for) absolutely everything and anything that might be judged to be an investment proposition. Where could a line be drawn? Would the regulator have to include fine wines, classic cars, antiques, stamps, works of art and so on, ad infinitum? The list would be endless. It couldn’t be done.

    Public awareness campaigns might have some impact but only to a very limited extent. When all is said and done, it’s as impossible to eradicate crime and to save people from their own gullibility, greed and folly as it is to control the weather.

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