On 20 April 2016, the UK Supreme Court issued its judgement in the case of Asset Land Investment plc v FCA confirming that Asset Land Investment plc (Asset Land) had been operating an unauthorised collective investment scheme (CIS) in the course of operating a land bank which involved the selling of small plots of land to investors.

In February 2013, the High Court found that David Banner-Eve, Stuart Cohen, Asset Land and Asset L.I. Inc ran an illegal land bank by operating a CIS without FCA authorisation. Investors were persuaded by Asset Land to buy individual plots of land for between £7,500 and £24,000 with the promise that the land would increase in value if the land got planning permission or was re-zoned. Asset Land and David-Banner Eve appealed to the Court of Appeal, which confirmed in April 2014 that Asset Land was operating a CIS.

The case was heard in January 2016 and in its judgement, the Supreme Court found that, although investors were the legal owners of their individual plots of land, in reality the arrangements of the scheme were that investors did not have control over their investment and Asset Land was the central operator of the scheme. Mark Steward, Director of Enforcement and Market Oversight at the FCA, said: “This decision should sound a clear warning to those selling dubious investments. We will do what it takes to shut down firms trying to exploit loopholes and take advantage of consumers.”

The High Court made an order in March 2013 against David Banner–Eve, Stuart Cohen, Asset Land and Asset L.I. Inc to make a payment of £21 million as part repayment to investors. That order has been stayed pending the Supreme Court’s decision. The current decision opens the way for the interim payment order to be enforced, although the FCA considers it unlikely that Asset Land and others will have the funds to pay the £21 million ordered by the High Court.

The FCA press release states:

“Today’s judgment provides further protection to consumers by confirming that it is necessary to consider the substance of the arrangements put in place by the operator when assessing if they are operating a CIS. Operators of such schemes will not be able to benefit by providing purely illusory rights to investors. Operators need to ensure that investors have genuine control over their investments to avoid being found to have operated a CIS.”

View Supreme Court dismisses appeal in Asset Land Investment v FCA, 20 April 2016