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Archive for the ‘Regulators’ Category
Wednesday, June 8th, 2011
• Plott UK given order in high court following FSA intervention
• Consumers invested £3.9m in landbanking firm
A landbanking firm has been issued with a winding up order by the high court after the Financial Services Authority (FSA) found it had been marketing plots of land as an investment opportunity and operating an unauthorised collective investment scheme.
Between May 2009 and April 2011, Plott UK Limited collected about £3.9m from UK consumers, promising investors returns of between 200% and 300%. But at least one of the plots was located in a designated area of outstanding natural beauty and was highly unlikely to ever receive planning permission.
The FSA does not regulate land as an investment, but it does regulate the operation of collective investment schemes (CISs), which is how it is able to pursue landbanking firms.
Following the FSA’s intervention, the high court made a winding up order against Plott and approved the appointment of a liquidator who will now identify, realise, and distribute the company’s assets to its creditors.
Plott customers invested a minimum of £10,000, but the FSA said it is aware of many consumers who invested tens and even hundreds of thousands of pounds with the company. Until the liquidator has completed its investigation the FSA said it is unable to confirm whether any funds will be available to give back to Plott’s victims.
The FSA said a company named European Property Investments (UK) Limited took over Plott’s business once the FSA took action, taking a further £639,000 from investors between 1 April and 25 May 2011. The FSA said it had managed to freeze and secure £180,000, but the rest was transferred out of EPI’s account before a freezing order was obtained.
It is now pursuing a civil case against EPI for operating an unauthorised CIS, but today’s injunction means the firm will be breaking the law if it sells land or engages in any activity involving a CIS.
‘Near-unsellable plots’
Many landbanking companies have been closed down in the UK after using misleading advertising or pressure techniques to persuade consumers to buy agricultural land at vastly inflated prices that subsequently turn out to be worthless.
Others went bust, such as United Land Holdings four years ago, disappearing with investors’ cash and leaving them with near-unsellable plots. To date, there is still not a single example of a landbanking company that has made money for its investors.
Tracey McDermott, the FSA’s acting director of enforcement and financial crime, said: “This is an important outcome and sends a warning to other unauthorised landbanks that the FSA can and will act decisively to shut them down.
“Consumers are much better off not putting their money into these schemes since, by the time we can catch up with the operators, most of the money has disappeared and investors are left with land that simply doesn’t reflect the money paid for it.
“In our experience, operators of unauthorised landbanking schemes do not work in isolation – they often work together and their schemes are evolving. We are working hard to stop them but the lesson remains: do not deal with unauthorised businesses as you are not covered by the Financial Services Compensation Scheme.
“Once the dust has settled we hope to be able to repatriate remaining funds to customers of both companies, but it is likely that some people will not get any of their money back.”
If anybody thinks they may have been contacted by a landbank they should call the FSA’s consumer helpline on 0845 606 1234.
Posted in Business, Financial Services Authority (FSA), guardian.co.uk, House News, Investing, Investments, Money, News, Property, Regulators, UK news | Comments Closed
Wednesday, June 8th, 2011
• Plott UK given order in high court following FSA intervention
• Consumers invested £3.9m in landbanking firm
A landbanking firm has been issued with a winding up order by the high court after the Financial Services Authority (FSA) found it had been marketing plots of land as an investment opportunity and operating an unauthorised collective investment scheme.
Between May 2009 and April 2011, Plott UK Limited collected about £3.9m from UK consumers, promising investors returns of between 200% and 300%. But at least one of the plots was located in a designated area of outstanding natural beauty and was highly unlikely to ever receive planning permission.
The FSA does not regulate land as an investment, but it does regulate the operation of collective investment schemes (CISs), which is how it is able to pursue landbanking firms.
Following the FSA’s intervention, the high court made a winding up order against Plott and approved the appointment of a liquidator who will now identify, realise, and distribute the company’s assets to its creditors.
Plott customers invested a minimum of £10,000, but the FSA said it is aware of many consumers who invested tens and even hundreds of thousands of pounds with the company. Until the liquidator has completed its investigation the FSA said it is unable to confirm whether any funds will be available to give back to Plott’s victims.
The FSA said a company named European Property Investments (UK) Limited took over Plott’s business once the FSA took action, taking a further £639,000 from investors between 1 April and 25 May 2011. The FSA said it had managed to freeze and secure £180,000, but the rest was transferred out of EPI’s account before a freezing order was obtained.
It is now pursuing a civil case against EPI for operating an unauthorised CIS, but today’s injunction means the firm will be breaking the law if it sells land or engages in any activity involving a CIS.
‘Near-unsellable plots’
Many landbanking companies have been closed down in the UK after using misleading advertising or pressure techniques to persuade consumers to buy agricultural land at vastly inflated prices that subsequently turn out to be worthless.
Others went bust, such as United Land Holdings four years ago, disappearing with investors’ cash and leaving them with near-unsellable plots. To date, there is still not a single example of a landbanking company that has made money for its investors.
Tracey McDermott, the FSA’s acting director of enforcement and financial crime, said: “This is an important outcome and sends a warning to other unauthorised landbanks that the FSA can and will act decisively to shut them down.
“Consumers are much better off not putting their money into these schemes since, by the time we can catch up with the operators, most of the money has disappeared and investors are left with land that simply doesn’t reflect the money paid for it.
“In our experience, operators of unauthorised landbanking schemes do not work in isolation – they often work together and their schemes are evolving. We are working hard to stop them but the lesson remains: do not deal with unauthorised businesses as you are not covered by the Financial Services Compensation Scheme.
“Once the dust has settled we hope to be able to repatriate remaining funds to customers of both companies, but it is likely that some people will not get any of their money back.”
If anybody thinks they may have been contacted by a landbank they should call the FSA’s consumer helpline on 0845 606 1234.
Posted in Business, Financial Services Authority (FSA), guardian.co.uk, House News, Investing, Investments, Money, News, Property, Regulators, UK news | Comments Closed
Tuesday, May 31st, 2011
IPPR also wants more controls on buy-to-let lending to stop property speculators feeding runaway housing market
Homebuyers should be legally required to put down a minimum 10% deposit and borrow no more than three and a half times their income to purchase a property if Britain is to avoid another damaging boom-bust cycle, according to a report by the Institute for Public Policy Research (IPPR).
Today’s report by the thinktank also argues for controls on buy-to-let lending to deter property speculators from ramping up the market.
The report sets the IPPR against most of the mortgage industry, which is campaigning for the Financial Services Authority to use “affordability” tests rather than formal caps on loan-to-value and loan-to-income. The FSA will be issuing a consultation paper this summer as part of its Mortgage Market Review, but so far it has stated that it believes LTV caps would be “too blunt a tool” to impose on lenders.
The IPPR said that easy lending practices by British banks before the onset of the credit crunch had left UK households with bigger mortgages, relative to their income, than in any other major economy.
“Almost all of the increase in household indebtedness in the UK has been as a result of more mortgage borrowing. At the end of 2009, the UK household sector had debts totalling £1.53 trillion, of which £1.19 trillion (78%) was secured on dwellings.”
The UK has the highest levels of mortgage lending as a percentage of GDP – 81% – higher than the US (73%), Canada (49%) and western Europe (44%) – as well as the highest levels of household and business debt relative to GDP.
IPPR director Nick Pearce said: “Britain has suffered four housing bubbles in the last 40 years, each of which contributed to major economic and social problems.
“We must learn the lessons from this economic history.?A central plank of economic policy should be to target moderate increases in house prices, rather than allowing runaway house price inflation which is always damaging in the long run.
“The housing minister, Grant Shapps, has tentatively floated the idea of aiming for house price stability but he and George Osborne should go further and make it an explicit policy objective. We need tougher mortgage market regulation from the FSA, especially caps on ‘loan-to-value’ and ‘loan-to-income’ ratios.”
According to campaigning group Shelter, first time buyers back tighter rules on lending despite the fact it will stop some people getting a mortgage.
In a YouGov poll, commissioned by Shelter, 75% of potential buyers said the banks must be forced to behave more responsibly. Four out of 10 said they did not believe that the banks could be trusted to lend responsibly in the future, and nearly a third (28%) said they had been offered a bigger mortgage than they had asked for, or knew someone who had.
Campbell Robb, chief executive of Shelter, said: “People really want simple, commonsense rules in place to ensure people borrow money responsibly. What is most striking is the level of support among first time buyers who clearly want greater protection and are well aware it might limit their chances of getting mortgage credit in the future.
“So far the voice of the consumer has been completely drowned out by the mortgage industry. We must not let banks go back to the old ways of irresponsible and reckless lending.”
The IPPR report is among the first to call for stricter regulation of the resurgent buy-to-let industry. It said deposit requirements on buy-to-let mortgages should be raised and lenders should ensure that rents cover repayments.
It said: “IPPR wants to deter small time speculators from seeking excessive capital gains from the buy-to-let market, since this activity feeds housing bubbles.
“The UK has the lowest level of institutional investment in private rented housing in Europe. We should be encouraging institutional investors to ‘build-to-let’ while discouraging individual property speculators using buy-to-let mortgages which can artificially inflate our housing market.”??
Posted in Banks and building societies, Borrowing & debt, Credit crunch, Economic policy, Financial Services Authority (FSA), First-time buyers, George Osborne, House News, House prices, Housing, Money, Mortgages, News, Property, Regulators, The Guardian, UK news | Comments Closed
Tuesday, March 22nd, 2011
• FSA’s concession welcomed by Council of Mortgage Lenders
• Plans ‘would have frozen out 2 million potential homebuyers’
The Financial Services Authority has made a key concession to lenders by admitting that its rules on how homebuyers should be assessed for a mortgage may be too stringent.
In its annual business plan, the FSA acknowledged that its proposal that lenders should look at whether a customer can afford a mortgage over a 25-year period “may not be appropriate given the range of individual circumstances”.
The regulator, which has faced intense lobbying from the industry, also stressed that it did not intend to ban interest-only loans.
“The FSA nevertheless remains focused on ensuring that the new regime includes a robust assessment by the lender of the affordability of the loan for the individual, both for interest only and repayment loans,” the regulator said.
The Council of Mortgage Lenders had warned that more than 2 million people would not have been able to take out mortgages if the new rules had been implemented, and had called on the public to write to the FSA, local MPs and ministers to protest against the “flawed and impractical” proposals. The lenders’ lobby group welcomed the move by the FSA on Tuesday.
The business plan for 2011-12 is likely to be one of the last published by the FSA, which will be broken up by the end of 2012 or 2013. It will be turned into the Prudential Regulatory Authority (PRA), to be headed by Hector Sants, the current FSA chief executive. The PRA is expected to cost an estimated £75m-£150m to set up.
A Financial Conduct Authority – with set-up costs estimated at £25m – is also being created and will be run from September by Martin Wheatley, who is at present head of Hong Kong’s financial regulator. Margaret Cole, the FSA’s head of enforcement, will take charge until Wheatley arrives. The FSA will try to operate under this new structure from next month.
A financial policy committee is being set up inside the Bank of England under Mervyn King, the Bank’s governor, to oversee macroeconomic issues and financial stability.
Sants pledged on Tuesday to keep the FSA’s headcount at 4,000 until the break-up of the regulator is completed, after hiring an extra 195 staff last year to help supervise major firms.
“The 2011-12 business year for the FSA will be a difficult one,” Sants said. “We have to ensure that we are operating effectively as a supervisor as well as taking forward the key policy initiatives … All this has to be done at the same time as taking forward the preparations for a new regulatory structure.”
Much of the work will involve implementing more than 20 EU directives.
Posted in Business, Consumer affairs, Financial sector, Financial Services Authority (FSA), House News, Housing market, Money, Mortgages, News, Property, Real estate, Regulators, The Guardian | Comments Closed
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