FSA Wins £32 Million High Court Judgement

March 21st, 2012 12:34

The FSA has secured a £32 million High Court judgment against three land banks but victims are unlikely to get their money back.

The Financial Services Authority (FSA) has won an important victory in the battle against unauthorised businesses after the High Court declared that James Kenneth Maynard, Countrywide Land Holdings Limited (Countrywide) and Plateau Development & Land Limited (Plateau) operated a collective investment scheme without authorisation and sold plots of land unlawfully to UK consumers. Regional Land and Countrywide were trading names used by Maynard.

His Honour Judge Pelling QC banned Maynard for life from selling land for business purposes in the UK and ordered him and Countrywide to pay £31,896,194 to the FSA, while Plateau, now in liquidation, was instructed to pay £918,975. 

A bankruptcy order was issued against Maynard, who is now believed to be living in Northern Cyprus and also another individual, Wasim Minhas, the director of Plateau, has been ordered to pay £75,000 to the regulator.

The FSA is yet to identy any assets that would enable more than a small proportion of these payments to be made, and therefore it is unclear how much will ultimately be returned to investors.  The FSA is continuing to make enquiries to trace the funds paid by investors.

Maynard, Countrywide and Plateau sold plots of land across the UK with the promise that investors would make a significant profit when the land obtained planning permission and was sold. Investors were also told by sales staff that Maynard, Countrywide and Plateau would apply for planning permission for the land or that they had corporate buyers lined up to purchase the sites.

In reality there was no intention to seek planning permission or help purchasers sell their land and the plots were in locations unlikely to ever gain planning permission, such as areas of outstanding natural beauty.

The FSA previously obtained injunctions against Maynard and Countrywide in August 2010 that froze assets and prevented them from selling more land to investors. The FSA subsequently discovered that Plateau had been set up to continue the business and, in December 2010, secured a similar injunction.

The FSA does not regulate the sale of land, but land banking may amount to a collective investment – something that does require FSA authorisation.  Maynard, Countrywide and Plateau have never been authorised by the FSA so their land sales were unlawful. Furthermore, as their business activities were unauthorised, victims of the scam are not covered by the Financial Services Compensation Scheme.

Tracy McDermott, acting director of enforcement and financial crime at the FSA, said:

“We have to be realistic about the low probability of securing meaningful compensation for victims of these scams, but this is still an important victory. Proving that a land bank is operating a collective investment scheme – and should therefore be FSA authorised – is very complicated, so every success puts us in a stronger position to tackle other schemes.”

“This decision sends a message to other land banks that we will not sit by and let them con investors out of their money. Indeed we have also started court actions against others that we believe have been involved in Maynard’s scheme.”

“Anybody investing in land should always have it independently valued to check its worth. Furthermore, if you are ever sold land as an investment with the promise of fabulous returns, and on the basis that someone else will manage it for you as part of a wider site, you should check the firm is authorised by us.”

Tenantsure and Preston North End In Visit to Local School

March 20th, 2012 11:01

Preston North End’s second year scholars Jordan Watson and Reece James certainly had youth on their side when they visited Eldon Primary School.

The youth team duo made the special trip on behalf of Paul Parry’s sponsor Tenantsure.

Tenantsure is a market leading Tenant Checking Service provided by Credit Reference Experts Creditsure. 

Their aim is to provide a highly professional yet low cost Tenant Checking service to Landlords and Lettings Agents across the UK.

Unfortunately, Paul had first team duties to attend to, but the youngsters were more than happy to step in and lend a hand to the Welsh winger.

James and Watson listened to and answered all the pupils’ questions and signed autographs for the avid North End’s fans in the classroom.

And the trip was made all the more special for Tenantsure’s representative at the school, Marc Curtis-Smith who was formally a pupil at the school.

Talking about the visit, community manager Gary Robinson said:

“Both Reece [James] and Jordan [Watson] were fantastic with the young children at Eldon primary.”

“It just goes to show what a great job the youth system do in not only turning them in to good footballers but respectable young adults as well.”

“The children had a fantastic time and asked the scholars plenty of questions about life at Preston North End.”

“Marc [Curtis-Smith] certainly enjoyed the appearance too – it’s always good going back to your old school!”

Preston North End would like to thank Tenantsure for their continued support of the Club.

Asset Financing Continuing to Grow

March 19th, 2012 11:07

Asset finance is continuing to show growth according to the latest statistics from the Finance and Leasing Association.

For Small and Medium Enterprises (SME’s) asset finance is the largest alternative lending option to the standard bank loans and overdrafts. Earlier this month Lord Sassoon, Commercial Secretary to the Treasury, launched a new on-line directory of around 1,000 sources of asset finance and other alternatives to conventional ban loans. The directory is aimed to assist 60,000 small businesses in accesing alternative finance in it’s first year.

January saw an overall growth in new asset finance business in January 2012, an increase of 14% compared to January 2011, to stand at almost £1.5 billion. There was also a 20% increase in the value of new business contracts of up to £20 million for the same period.

The FLA figures show that in January, the sales finance channel reported the strongest rate of growth, with new business 36% higher in January than in the same month in the previous year, at £408m. 

Broker-sourced asset finance grew by 30% over the same period to £282 million. The direct finance channel reported double-digit growth for the third consecutive month, with new business up by 16% to £778 million.

Commercial vehicle finance grew by 23% in January which has now seen year on year growth for the past 18 months. Growth in plant and machinery finance was at its strongest in more than three and half years, with new business up by 40% compared with January 2011.

Geraldine Kilkelly, Chief Economist and Head of Research at the Finance & Leasing Association, commented:

“Our latest figures follow the trend of growth in asset finance that we have seen over the past twelve months. While cash flow is important for small businesses, the evidence is that many are using asset finance to invest in new equipment and to expand their businesses.

“Initiatives, such as the Small Business Finance Directory, present options for alternative finance. We hope that the taskforce’s report will raise awareness of the funding sources that are available to small and medium-sized businesses.”

Drop in Rent as Tenants Rush to Beat Stamp Duty Holiday

March 16th, 2012 12:20

The end of the stamp duty holiday has seen a decrease in rental fees during February with people looking to make best of use of the holiday and purchase a property, say LSL Property Services PLC.

The Buy-To-Let Index from LSL showed that the average rent in England and Wales for February dropped by 0.6% to £707 per month after an increase in January. Although the amount of rent being paid dropped slightly in February, rents continue to rise on an annual basis with an increase of 3.5% – a £24 rise in the past year.

The biggest decreases were in the Midlands, with rents falling by 2.2% in the East Midlands, and by 1.8% in the West Midlands. Rents rose in three regions, increasing by 0.7% in the North East and 0.5% in both Wales and the South West. Rents dipped by 0.4% in London, only the second monthly fall in the past 14 months.

In the last 12 months the largest increases in rents have been in London, where rents rose by 5.6%, and the East of England, where rents increased by 5%. On an annual basis, rents have only fallen in one location, dropping by just 0.2% in the East Midlands.  

David Brown commercial director of LSL Property Services said:

“The looming spectre of the end of the stamp duty holiday has taken its toll on tenant competition in the run-up to the deadline, easing the upwards pressure on rents. In February, an increased number of tenants either became owner occupiers, or seriously considered property purchase, rather than renewing their contract or seeking a different rental property.”

“With fewer tenants than usual actively competing for properties, combined with a slight improvement in the number of rental properties becoming available, many landlords priced less aggressively to avoid the prospect of a void period.” 

“In the longer-term, it’s difficult to see a prolonged decrease in the tenant demand underpinning rental inflation. There are already indications that mortgage lending is falling back, and that mortgage rates are beginning to climb, which will limit the number of prospective homebuyers leaving the rental sector.”

“While the NewBuy scheme may support a limited number of first-time buyers, its impact will undoubtedly be off-set by the removal of the stamp duty holiday. As a result, and given the growing number of households, the pressure will remain on the private rented sector.”

“Stabilising house prices have bolstered the total annual returns property investors currently enjoy. In addition, healthy rental yields and historically attractive mortgage rate are drawing in investment from prospective landlords. However, to accommodate the UK’s growing number of households, and given the lack of money available for social housing, the private rented sector must continue to expand – and the government must address this in the Budget.”

“A simple change to capital gains tax, allowing landlords to reinvest capital gains without it being taxed would help stimulate further growth, reducing the strain on the current provision of rental accommodation.”

“Tenant finances have been boosted by the easing level of inflation at the start of the year, allowing many to get their monthly budgets in order – and this has reined in the overall level of rental arrears. Nevertheless, it’s clear that the bulk of arrears are being accounted for by a growing minority who are falling further and further behind with monthly payments. As unemployment rises, we anticipate this proportion of renters will climb.”

Spanish Mortgage Market on Clean Up Mission

March 14th, 2012 11:38

Many countries still face the burden of the weight of repossessions on their balance sheets due to the financial crisis that hit  mature mortgage markets. Spain is one such country.

The financial crisis that hit the UK forced mature mortgage markets to re-evaluate their ways and now face greater scrutiny and regulation in the selling of financial products, but how did other countries fare? One such country that was hit hard is Spain who are still suffering under the weight of repossessions on their balance sheets.

New Prime Minister Rajoy is on a clean-up mission, report Fluent Finance Abroad.

Independent Mortgage Consultant and Owner of  Fluent Finance Abroad, Marc Elliott, explains:

“You have to remember that Spain has only been a fully-fledged capitalist democracy for 32 years, and without the infamous dictator Franco for 36, so its banking and mortgage systems have had comparatively less time to mature. As the property market boomed, many banks took a naïve approach to lending money and they are suffering for it now.”

“Whilst the UK has various checks and balances in place to prevent the recurrence of scandals such as the endowment mortgage mis-selling of the 80s and 90s, Spain has yet to get a watertight grip of its financial products although Rajoy is making huge strides.”

“Whilst Spain didn’t have ‘official’ sub-prime mortgages in the same manner as the US, throughout the late 2000s it did fall victim to unrealistic mortgages being handed out by greedy banks with the help of unscrupulous mortgage advisers, real estate agents, lawyers, surveyors, valuers and accountants.”

“Local newspapers bore adverts offering fake P60s for credit purposes and many people took advantage. The consequence today is banks having to repossess a significant number of homes making them huge real estate owners and putting a strain on their balance sheets – particularly as Rajoy is asking banks to make additional provisions.”

” The Government is forcing takeovers and mergers – Banco Sabadell acquired CAM bank for one euro in December 2011, BBVA acquired Unnim bank for the same price this month – in order to accelerate the clean-up.”

KPMG: Potential Tax Breaks Could Boost UK Economy

March 13th, 2012 10:41

New measures that could provide a small boost to the UK economy could be with us as soon as this months budget, according to KPMG.

David Kilshaw, chair of private client advisory at KPMG in the UK, explains:

“A ‘giveaway’ budget is not on the cards but there are changes expected on targeted tax incentives for investment that could be very valuable.  Amendments to the non-dom rules to allow them to invest in qualifying UK businesses could open the door to monies flowing into the UK.  And the introduction of a new Seed funding regime plus changes to existing enterprise investment schemes should make these investments more attractive to business angels, entrepreneurs and high net worth individuals.”

The key tax incentives expected for investment are:

  • changes to the non-dom tax rules around investing monies held offshore  into the UK
  • enhancements to the Enterprise Investment Scheme and Venture Capital trust rules, and
  • the introduction of the new Seed Enterprise Investment Scheme.

David Kilshaw continued:

“Imagine the scenario…. A non-dom (“Mr Non-Dom”) has been resident in the UK for a number of years and has always opted for the remittance basis of taxation (under which only foreign income and foreign chargeable gains that he brings into the UK are subject to UK tax).  An interesting business opportunity is put to him to invest in a UK trading company.  However, over the years he has used up all funds that have already been taxed in the UK and any offshore capital (ie monies which can be remitted to the UK tax free).”

“The only monies he has available to remit to the UK would be subject to a tax bill for Mr Non-Dom of up to 50 percent – increasing the effective cost of his investment. Investing £1m would cost him £1.5m, because half as much again of the cost of the investment would go to the Revenue.”

“However, we expect new rules to be unveiled around the time of the budget to change this situation.  According to proposals that have been out for consultation, an exemption for non-doms is on the cards under which they can invest monies into businesses tax free.”

“There are some restrictions: the businesses must either be carrying out a trading activity or undertaking the development of commercial property (not residential) and the investment must be in actual companies, not in sole traders or partnerships.  But there are no upper or lower limits to the level of investment – which is positive for those with deep pockets who see the UK as a good business opportunity.”

UK Spends Almost £300 Million on Daily deals in Just Six Months

March 12th, 2012 09:58

UK Consumers have spent a massive £292.5 million on daily deal websites in only six months

The figures were revealed by organisers of the DD Summit Europe, an event spurred by substantial growth in the daily deals market. The figures released shows that between July and December 2011 consumers saved an average 56% by shopping on daily deal websites, which adds up to a whopping £375m.

The daily deals market is definitely growing. There are currently 70 active daily deal sites in the UK and more than 200 new sites have launched in the past six months across Europe. Online daily deal sites have quickly influenced UK consumer shopping habits.

Websites such as Groupon, Living Social and kgbdeals offer subscribers up to 90 per cent off everything from haircuts to holidays. The DD Summit Europe will bring together all of these key players, and others, for the first time ever.

Stavros Prodromou, director of DD Summit Europe, said:

“Consumers are already spending a huge amount of money on daily deals and this is set to increase in 2012.”

“In this time of recession people are always looking for good value and with the advent of the smartphone, daily deals have exploded onto the market. This industry is one of the few success stories of the economic downturn.”

Home Owners Expecting House Prices To Remain the Same

March 9th, 2012 10:40

Eight out of ten home owners think the value of their property will rise or stay the same in the next 12 months, according to a survey by Clydesdale and Yorkshire Banks.

The survey by the banks showed that 66 per cent of people believe their home will remain at the same value. A further 18 per cent think it will rise with only 16 per cent of those surveyed thinking the value of their property will decrease.

Property owners in London were the most upbeat about the price of their home, with 39 per cent thinking it will rise and only six per cent expecting a fall in the value of their property.

Yorkshire (22 per cent expecting a rise), Scotland (21 per cent) and the South West (21 per cent) all followed suit with double digits for the amount of property owners who felt the value of their property would rise.

Property Industry Discusses its Role in Mending ‘Broken Britain’

March 8th, 2012 13:53

With youth unemployment at a record high and last summer’s riots fresh in the memory, the property industry gathered Thursday to consider its role in tackling some of the issues facing Britain.

At a MIPIM summit hosted by the British Property Federation and RealService, delegates heard that the property industry can play a crucial part in reducing youth unemployment and fostering social cohesion in our communities, as well as supporting SMEs – a sector that employs the majority of the UK’s workforce.

Liz Peace, chief executive of the British Property Federation, said:

“The property industry makes up a major part of the UK economy in its own right, as well as providing a platform for virtually all of the other country’s other major industries.”

“The sector also provides places for people to live and employs over 800,000 people across the country and is consequently fundamental to the social and economic health of the country.”

Howard Morgan, founder and managing director of RealService, said:

“The property industry isn’t directly to blame for Britain’s economic and social malaise but equally it can’t just shrug it off as somebody else’s problem to fix. Our industry must recognise that it has a significant part to play in mending broken Britain by virtue of the vast amount of land and buildings it controls, its unrivalled access to capital funds and professionalism.

“We observe that the more successful property companies in these tough economic times are the ones who invest in understanding their customers and all those affected by their businesses. These companies feel that they never have enough understanding of their customers and stakeholders – they never think they know it all.

“The successful companies are customer-serving rather than self-serving because they know it makes economic and social sense.  We would like to see more property companies follow the lead of these research-driven success companies and focus on their customers’ wants and needs as opposed to their own. This will help them to enjoy a more sustainable and prosperous future not only for themselves but for our industry and Britain as a whole.” 

Debt Management Needs Better Regulation

March 7th, 2012 11:32

The Business, Innovation and Skills Committee today published a report into Debt Management looking specifically at payday loans and commercial debt management companies.

The report highlights shortcomings and areas of concern with regards to this industry and makes recommendations for future Government action.

The Chairman of the BIS Committee, Adrian Bailey MP, said:

“During these difficult economic times, increasing numbers of people up and down the country-not least some of the most vulnerable members of our society-are relying on the provision of consumer debt management services and payday loans to make ends meet.”

“And yet this industry remains opaque and poorly regulated. Despite a Government consultation that ended almost a year ago little has been done to remedy the situation.”

“The Government must take swift and decisive action to prevent firms from abusing the needs of such a vulnerable customer base.”

The report highlights four main areas of ongoing concern:

1. On the regulation of Consumer Debt

-  The Government should-within 6 months-outline a timetable and methodology for how and when a decision will be made on whether the power to transfer consumer credit from the OFT to the FCA is to be exercised.

- The Government should put in place the following reforms

- Higher licensing fees be charged for higher-risk credit businesses

- A fast track procedure be put in place to suspend credit licenses

- The regulator be given the power to ban harmful products

Adrian Bailey, said:

“The Financial Services Bill did little to clarify the way in which the consumer credit market is to be regulated.”

“In the meantime, almost a year after the Government consultation closed, consumers and industry operators remain in limbo. This is clearly unacceptable.”

2. On Payday Loans

- The Government must act to limit the rolling over of payday loans and the switching between payday loans and the subsequent rolling over of loans.

- The Government should ensure payday providers record all of their transactions on a database.

- The Government must make clear that unless payday loan companies demonstrate a commitment to moving away from the continuous payment authority as the method for receiving payments, the new regulator will be asked to address this as a priority.

- The Government should provide the Committee with an update on the development of the industry codes of practice by the end of 2012.

- The Government must act swiftly to counter any evidence of non-compliance contained within the OFT report.

Adrian Bailey said:

“Payday loans, by their very nature, appeal to those in serious financial need, some of whom will have low levels of financial literacy.”

“We must be certain that this industry adheres to the highest standards – either through the codes of practice that are currently being developed or, failing that, by the new regulator.”

“Consumers must have a clear idea of the cost of this form of credit and of the realities and penalties of late payment.”

3. On Debt Management Companies

- The Government must work to phase out up-front fees – the provision of guidance on this point by the OFT is inadequate.

- The Government introduce the necessary regulations to ensure companies publish the cost of their debt advice and their outcomes, if an agreement cannot be reached during discussions with the industry.

- The Government should establish effective auditing of Debt Management Companies’ client accounts.

Adrian Bailey said:

“Greater transparency in the commercial debt advice market will benefit consumers hugely. The Committee feels that voluntary codes of practice are highly unlikely to achieve this aim.”

“The Government must be prepared to regulate if consumers are to receive the protection and the level of information they require.”

4. On the Money Advice Service

- The Money Advice Service should provide details of its business plan.

- The Minister’s assertion that there will be no diminution of face-to-face debt advice is confusing given that the legal aid budget for such services is being cut by 75%.

“The Money Advice Service will be up and running by April and yet its remit, and in particular its relationship with highly respected brands such as Citizens Advice, remains unclear.”

Adrian Bailey said:

“Equally unclear is the future of face-to-face advice. The Minister assured the BIS Committee that this would not be cut and yet worryingly the evidence points to the contrary.”

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