Latest land scam shut downCityshore guilty of misleading consumers
16 December 2011
The Financial Services Authority (FSA) has secured a High Court judgement against Cityshore Commodities, which conned hundreds of thousands of pounds out of consumers through an illegal land banking scheme.
Cityshore and its director Aaron Walker were ordered to make an interim repayment of £200,000 to its victims and were also banned for life from selling land in the UK for business purposes.
Earlier this year, Cityshore manager Ashley Cunningham had been banned and made to pay the FSA any sums she received through the business.
Cityshore was stopped in its tracks by an initial FSA injunction in January 2011, having sold land for more than £400,000 at a significant profit.
Why was this landbanking firm shut down?
Land banking is a highly inadvisable investment for consumers. The companies running the schemes buy a piece of land, sub-divide it and sell each plot on to individual investors for an inflated price.
Cityshore had persuaded investors to buy plots of land in Grantham, Lincolnshire, promising handsome profits once they had obtained planning permission and re-sold the land on their behalf.
However, the unauthorised company was found to have no intention of getting planning permission or helping investors make a profit by selling the land.
Landbanking is a poor investment
Following an in-depth Which? investigation into land banking investments earlier this year, we believe that consumers will never see the profit that companies promise at the outset and will often lose their investment altogether.
The occurrence of land banking scams has soared in recent years and while the FSA does not regulate land sales, land banking is technically a collective investment, which does require FSA authorisation.
'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 a firm that is authorised by the FSA,' said Jonathan Phelan, head of retail enforcement, FSA.