The Financial Services Authority (FSA) has banned Cityshore Commodities and its director Aaron Walker from selling land in the UK and ordered them to make an interim payment of £200,000 through the FSA to the victims of their illegal land sales.

The regulatory body secured a summary judgement in the High Court against the company and Walker on 9 December, after they were found to be selling land illegally to UK consumers.

Cityshore sold plots of land in Grantham, Lincolnshire to investors with the promise that they would make a profit when the land obtained planning permission and was subsequently sold on.

Customers were informed by Cityshore’s sales staff that planning permission had been applied for, or that house builders were lined up to purchase the plots.

In a statement, the FSA said that the company had no intention of seeking planning permission or of helping purchasers sell the land, and that in fact the plots of land were in an area that meant they were unlikely to gain planning permission.

The FSA obtained an initial injunction in January this year after Cityshore had made sales of land totalling more than £400,000 at a ‘significant profit’.

Earlier in the year, Ashley Cunningham, a manager at Cityshore, consented to a similar ban as part of the same case. She was ordered to pay to the FSA sums received by her for her involvement in the business.

Jonathan Phelan, head of retail enforcement at the FSA, said, ‘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.’

The FSA stated that it does not regulate the sale of land but that land banking amounts to collective investment, which requires its authorisation. Cityshore was never authorised by the FSA so its land sales were illegal.

The regulatory body first took High Court action against a land banking firm, UK Land Investments, in 2008. Since then, it has obtained injunctions against eight companies involved in land banking.