Some of the firms offered to help investors build up property empires worth £1 million in one year, in return for large fees. None of the investors achieved the projected figure and lost tens of thousands of pounds.
The government condemned the get-rich-quick schemes, saying they were ‘completely misleading’. The crackdown followed an investigation by the newly named Department of Productivity, Energy and Industry.
The move comes in the wake of the FSA issuing its first fine on a property-related matter to a regulated financial adviser. Courtover Investment Management Ltd was fined £20,000 for approving a misleading financial promotion for the issue of unlisted shares in a separate property investment company, Overseas Property Investments plc.
Anna Bradley, the FSA’s director of Retail Themes, said: “All firms which produce financial promotions must ensure they are clear, fair and not misleading, and special attention must be paid to providing a balance between risks and benefits in any promotion for investments.”
On the possibility of future buy-to-let regulation David Whitely, spokesman at the FSA, said: “It’s a government decision but there are no immediate plans that we are aware of.”
Government officials responded that there were no plans to regulate the industry because there were already sufficient powers to close down offenders.
Andy Frankish, managing director of Mortgage Talk, said: “Regulation of the buy-to-let market has always been something of a contentious issue but it’s no surprise to hear there are no immediate government plans.
“There is always the danger however that leaving the area unregulated will attract unscrupulous firms so it’s positive to hear the government taking a stand.”
