Money News
City watchdog, the Financial Services Authority (FSA), has asked the High Court to wind up the UK's largest 'landbanking' company, UKLI Limited (UKLI), for operating as an illegal collective investment scheme (CIS) and denying its investors protection for their money.
UKLI advertised and sold plots of land to people by claiming that it could get planning permission for the land, which would increase in value and make investors a large profit once it was sold to a developer. As a result, about 4,500 investors paid UKLI £69 million to buy the land. None of the land sold was ever granted planning permission.
UKLI's business was illegal because it operated as a CIS and should have been authorised by the FSA. The lack of authorisation means that its investors are not entitled to make a complaint to the Financial Ombudsman Service or to claim compensation from the Financial Services Compensation Scheme.
The FSA has also been granted an interim freezing and restraining order against UKLI to protect its assets for creditors, including investors and to prevent it from continuing to operate as an illegal CIS.
Jonathan Phelan, Head of Retail Enforcement at the FSA, said: "People invest to provide a better life for themselves and their families. The FSA will not hesitate to pursue companies like UKLI which offer unauthorised and illegal services which put such investments at unnecessary risk.
"We will continue to do everything possible to keep people safe from illegal schemes that deny them their right to complain and get compensation when things go wrong.
"Our action, against UKLI, should serve as a warning to other companies that might be breaking the law in this way."
Since the FSA's petition was filed, Lee Manning and Carlton Siddle of Deloitte have been appointed as joint administrators of UKLI. The administrators are in the process of contacting all investors who have bought land from UKLI with more information on what will happen next.
05 June 2008 © Moneyextra.com
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