The sometimes controversial practice of "land banking" has led to court proceedings against a number of firms and persons in Australia, while the national regulator is carrying out a broader probe of the whole industry.

Australia’s financial regulator has started court proceedings against firms promoting land banking schemes to investors, alleging that these are unregistered. Its actions are part of a wider investigation into the practice.

Proceedings have been initiated in the Federal Court of Australia against companies associated with Jamie McIntyre and the 21st Century Group in relation to their promotion and sale of interests to investors in five land banking schemes, the Australian Securities and Investments Commission said in a statement late last week.

ASIC alleges that the schemes are unregistered managed investment schemes and that the 21st Century Group companies and McIntyre have been unlawfully carrying on an unlicensed financial services business.

Land banking is a controversial practice and sometimes associated with fraud. In the UK, for example, the regulator, the Financial Conduct Authority, states that land banking companies divide land into smaller plots to sell it to investors on the basis that once it is available for development it will soar in value. However, the land is often in areas of natural beauty or historical interest, with little chance of it being built on.

In the Australia case, the five schemes are promoted and advertised as:

- Botanica, located at 805 Archer Rd, Kialla, Victoria 3631;

- Secret Valley Estate, located at  955, Old Sydney Road, Bylands, Victoria 3762;

- Oak Valley Lakes Estate & Resort, located at 124 Booth Road, Brookhill, Townsville, Qld 4816;

- Bendigo Vineyard Estate & Resort, located at 51 Andrews Road, Bendigo, Victoria 3551;

- and Melbourne Grove Estate, located at 1491 Dohertys Road, Mount Cottrell, Victoria 3024.

“ASIC understands that there are over 100 investors in the schemes, which have been promoted to investors, including through seminars, by entities associated with Mr McIntyre's 21st Century Group. Companies associated with Mr McIntyre and the 21st Century Group are also the developers of the schemes (development companies). ASIC is seeking orders to appoint a provisional liquidator or receiver and manager to each of the five schemes and the development companies in order to take control of any assets and protect the interests of investors,” it said.

The development companies are:

- Archery Road Pty Ltd (ACN 162 921 735);

- Bendigo Vineyard Estate Pty Ltd (ACN 600 088 211);

- Secret Valley Estate Pty Ltd (ACN 602 817 532);

- Kingsway South Holdings Pty Ltd (ACN 159 230 976);

  -- Melbourne Tarniet Estate Pty Ltd (ACN 603 945 393).

ASIC is also taking action against the development companies and the following people for being involved in an unlicensed financial services business, it said.

- Jamie Neville McIntyre (Surfers Paradise Qld);
 
- Dennis McIntyre (Surfers Paradise Qld);

- Property Tuition Pty Ltd (ACN 129 421 281);

- Education Holdings Pty Ltd (ACN 129 551 917);

- Sourcing Property Pty Ltd (ACN 602 474 779).

ASIC is also seeking orders that each of the defendants, including Jamie McIntyre, be restrained from promoting, further promoting or operating any of the schemes and from operating a financial services business.

The matter is set down for a first hearing on Friday 14 August 2015.

Wider probe
ASIC’s proceedings are part of the regulator’s wider and ongoing investigation into land banking schemes.

ASIC this week settled proceedings commenced against Midland HWY, which was the developer of a land banking scheme known as, Hermitage Bendigo (formerly Aacia Banks) located outside of Bendigo in Victoria. The 21st Century Group also promoted this development.

“While ASIC does not regulate direct property investment, ASIC considers that land banking schemes, depending on the particular scheme, may be a managed investment scheme and/or a financial product and that the promoters of these schemes should therefore hold an Australian financial services licence and register these schemes with ASIC,” it added.