Sarah McCarthy-Fry (Parliamentary Secretary, HM Treasury; Portsmouth North, Labour)

The regulation of Collective Investment Schemes (CIS) as defined in section 235 of the Financial Services and Markets Act 2000 is a matter for the Financial Services Authority (FSA), as the independent regulator.

On 1 April 2008 the FSA applied for a winding up petition against UK Land investments (UKLI) on the basis that: (i) UKLI had carried on and was carrying on a regulated activity in breach of the general prohibition within the meaning of section 367(1) of the Act; (ii) UKLI was unable to pay its debts within the meaning of section 123 of the Insolvency Act 1986; and (iii) it was just and equitable that UKLI should be wound up.

The FSA had previously advised UKLI that its landbanking scheme fell within the definition of a CIS and that the operation of a CIS without authorisation by the FSA amounts to a breach of the general prohibition (section 19 of the Act) and was a criminal offence (section 23 of the Act). The FSA also advised UKLI that the investors who had invested in its scheme to date would be entitled to recover any money paid pursuant to the scheme and/or recover compensation for any loss sustained by them pursuant to section 26 of the Act.