An increasing number of disappointed investors are making complaint, having been snared into “land banking” schemes.

Invariably, a cold call from a company with an impressive name prompts the private investor to show an interest in the concept of buying land on the hope that one day, it will be the next Cribbs Causeway or (dare I say) Bradley Stoke. Buy land – after all, they aren’t making any more of it!

The reality of many of these schemes is that a “developer” buys a farmer’s field for £10,000 and sells small parcels of it to 100 people for £10,000 each.

It’s easy to see how he makes his money – but usually very hard indeed to see how the “investors” will ever recoup their investment, let alone the pie-in-the-sky profits which the telesales callers predict. Sometimes land will be protected green belt, an Area of Outstanding Natural Beauty or even a Site of Special Scientific Interest – nevertheless it is touted as having “excellent development potential” for the future.

Anyone who has sat on a committee will be able to guess how hard it would be to get all of these “landowners” to work together on a planning application even if one were to stand a chance of success.

The promoters of these schemes will go to great lengths to take as much of their target’s savings as possible. Simply investing a little is not an option as the pressure mounts to buy more and more plots. People find themselves suckered into multiple land deals until they finally see the light.

The promoters will also try to make it easier for investors not to take independent legal advice on the matter – sending witnesses round to witness signatures for example, so that the investor is not at risk of mentioning this “wonderful opportunity” to a more sceptical neighbour or advisor. Keep it between ourselves, eh – don’t want to let everyone else onto such a good thing.

In these circumstances, a careful analysis of the legal and contractual position is called for. Robust letters followed by swift court action are often required to protect the investor’s rights. A thorough review of the sales process can identify chinks in the armour these people hide behind and go some way to recovering funds. Police involvement can be sought – but the schemes are careful to avoid scrutiny of the authorities wherever possible.

Until legislation brings this form of investment within the regulated Financial Services sector, investors should be careful to take full independent advice before parting with any funds. Those who have lost out to such schemes should have the process reviewed by an experienced Solicitor in case there is a prospect of recovering some funds.

SME and B2C marketing thinking has many ideas and theories about why and how people buy.

Sometimes we’ll buy an item or service because we trust the brand – think of John Lewis for example – but a great deal of business transactions are brought about by knowing, liking and trusting an individual.

There are a number of reasons for this.

It can be time consuming and expensive for a business to establish a corporate brand which is known, liked and trusted enough to bring business in of itself.

For many purchases however, people buy from people.

A potential client will want to engage someone who they feel they can get along with. Someone who “talks their language” or who they feel some empathy with – often in priority to the brand or organisation which that person represents. Also, the power of a personal recommendation cannot be overstated.

We’ve recognised this ourselves in the way our website introduces our lawyers as approachable people – not just lawyers but rounded individuals with personalities, senses of humour and – would you believe it – interesting lives outside of the office. Prospective clients can check us out online as individuals working together under the Wards banner. As a result, many new clients now come in saying that they feel like they know us already – even before stepping into their first meeting.

Bringing the personal element into a marketing strategy is increasingly important – and very fashionable – for those services where the customer or client has a high degree of personal interaction with a trusted advisor.

This is the reason why business and social networking sites are the focus of so much attention by marketing professionals at the moment.

Professionals are exhorted to build up their own following on Twitter, or to have as many LinkedIn, Facebook or Ecademy contacts as they can carry. When a need arises, or a tweet hits the spot, any of those contacts can ping off an email without the need to search for the right person, break the ice and begin building a relationship.

The initial stages of the relationship (knowing, liking, trusting etc) are already well underway by the time you are keeping up to date with what can sometimes seem to be the most tedious details of someone’s work and home life.

Somehow, knowing what someone likes on their toast for breakfast, or where they went on holiday, makes it easier for a Financial Director to consult them about an imminent threat to the profit & loss account

However, this can all have serious implications for the employer.

Building a business based on individuals and their own networks can bring appreciable risks to the information employers prefer to keep confidential – and information which they are under a legal duty to control.

For example: -

• The Data Protection Act requires data to be kept for specific purposes only. Using the automatic contact finders on some networking sites allows third party access to your Outlook contacts – which will almost certainly have detailed client contact information – putting you in breach of the Data Protection Act.
• An employee’s profile on social networking sites follows them from job to job. How can employers control what information appears on a former employee’s networking entries/contact lists?
• Many of these sites allow recommendations and reviews to be posted which follow the employee, not the employer. These need to be managed as they can reveal details about the employee’s clients which should best be kept confidential. Also, is the recommendation really for the business rather than the salesman?
• There are increasing concerns about privacy on Facebook and other such sites.
• Employers need to consider the extent to which their marketing strategy permits individuals, rather than the business itself, to build a following.
• Employees don’t need to print off Outlook contacts or sneak a memory stick out of the office to take their contacts with them when they join a competitor. A watertight restraint of trade clause is critical for businesses which are vulnerable to this sort of threat.

For these reasons employers need to:

• keep a handle on how employees promote businesses online & develop a policy about contacts;
• consider implementing a formal policy on what can and what cannot be uploaded – and what should happen to data and contacts if the relationship should come to an end; and
• carefully define confidential information in the contract of employment to minimise disputes when the employment comes to an end.

James Taylor is an Associate Solicitor with Wards Solicitors.

The activities of our new Coalition Government have been watched keenly over the past few weeks, particularly when they relate to our already fragile finances. Discussions have been well-publicised concerning potential changes in VAT, income tax, pensions and now Capital Gains Tax (CGT). With an emergency Budget due on 22 June, the fact that many plans still lack full details does nothing to put minds at rest.

The Coalition Agreement indicates that Capital Gains Tax will be increased to approximately the same rate as income tax. They have further suggested that there will be “generous reliefs” for entrepreneurial and business assets.

In Plain English:

• The CGT rate is set to rise from 18% to 40% (or even 50%)
• It isn’t clear when this will take effect
• A retrospective change from the beginning of this tax year seems unlikely
• The CGT rate could change for disposals which take place after the “emergency budget” planned for 22nd June.
• It has been suggested that the CGT rate will probably increase to 40% (or even 50%) from the beginning of the next tax year (i.e. for disposals after 6 April 2011)
• It has been suggested that there will be a lower rate for business assets (but a figure has not yet been confirmed)

So, what does that mean for you?

Although full details of the proposals are not yet available, we can help you with implementing some suggestions that have been made as to how you might prepare for this change.

Non-business assets

If you have non-business assets (for example a buy to let property) you may want to consider making a disposal or transferring equity before the changes come into effect.

If, as expected, CGT is raised to 40pc for non-business assets, someone who bought a £100,000 second home 25 years ago could pay an extra £56,000 in tax if the Government decides not to take inflation into account, according to recent reports. Most properties bought by private investors, such as buy-to-lets and holiday homes, are regarded as non-business assets and so would not be exempted from any rise in CGT.

If a third party disposal is not possible, there are other options to “bank” the 18% rate and it would be worth your discussing these with your financial adviser.

Business assets (including shares)

At present Entrepreneur’s Relief reduces the rate of CGT on disposals of business assets to 10%, but Entrepreneur’s Relief is only available on the first £2m and business gains in excess of that are subject to CGT at 18%.

Consequently, where the gain will exceed the £2m per person limit, there may be some merit in trying to complete company sales or the disposal of business assets before the general CGT rate increases. There may even be ways to “bank” the 18% rate and it would be worth discussing these with your financial adviser.

It is also possible that the “generous” entrepreneurial/business reliefs referred to in the Coalition Agreement will be more generous than Entrepreneur’s Relief.

What should you do if you’re worried?

As with all situations like this, your first call should be to an expert. They will be able to discuss all of your options with you, or direct you to a specialist who can help.

If you would like to discuss any of your concerns please contact:

Jenny Pierce – Trusts, Estates & Wealth Management
Bridget Juckes – Commercial

If you would like to consider selling your property please contact:
Susan Ellis – Conveyancing

Telephone: 0117 9292811
www.wards.uk.com

The oft-heard joke about investments that can go down as well as plummet is proving all too true for many investors at the moment. Some funds have taken a hit through poor market performance, and investors’ financial plans or retirement prospects have been dealt a severe blow.

The majority of capital investments will naturally vary with the state of the economy. Banks and building societies pay lower interest rates, and other investments are worth far less than was paid for them.

Most investment products are marketed as limiting the exposure of client funds to the fluctuations of share prices, by not putting all the eggs in the same basket. The more holdings an equity-based fund has, the less exposed it is, or so the theory goes.

These products themselves will have different investment strategies – some riskier than others – and this must be carefully considered by investment advisers when recommending them to clients.

Independent financial advisers, stockbrokers and other investment advisers have a legal duty to ensure that their investment recommendations are suitable for their clients. That involves understanding the client’s investment objectives and attitude to risk.

Providing competent investment advice is a complex task. Matters to consider for each investor include: -

• are capital growth, or income generation, or both desired ? This will vary according to many factors including the lifestyle, family situation and retirement aspirations of the client;
• whether the client wants as much protection of their capital as possible, or is prepared to accept a degree of risk in the hope of a greater return. Many nearing retirement want to safeguard previous capital growth rather than risk their money in the hope of a higher return – those who are some time away from needing their money may be happier to accept more risk of a capital reduction if the potential rewards are higher;
• whether the client has the same approach for all of their investments – some clients may nominate certain money they are prepared to risk for greater reward, whilst remaining cautious with the rest of their funds.

Given the above, it is not surprising that when investments drop, or fail, investors will wish to be quite sure that the advice that they received was correct and competent.

The Financial Services Authority has any number of rules of conduct setting out how advisers should conduct investment business. The adviser’s reasoning when recommending investments has to be recorded in a “suitability letter”. So there is a paper trail which, when clients question the performance of their investments, can be carefully considered. There is no doubt that poor economic conditions have exposed some unsuitable investment advice given during good times. Money has been invested in riskier places than the well-informed client would have wished or instructed, and lost.

The majority of reputable and competent advisers will take comfort that their advice was thoroughly researched and documented, and honestly given in the client’s best interests on available information at the time. There are, nevertheless, some who will have allowed their focus on these areas to be distracted, and who are being exposed as they face claims through the Financial Ombudsman Service or through the courts.

None of the above constitutes investment advice. Legal or investment advice should be taken from regulated insured professionals on individual circumstances.

For more information contact James Taylor .

Wards Solicitors is currently investigating the circumstances in which shares in the above Plc were acquired by investors.

We would like to ascertain how shares in this AIM-listed Plc were promoted and sold, and whether investment advisors gave appropriate advice at point of sale. We are interested in representing any investors who were mis-sold shares in this company.

If you held shares in this AIM-listed Plc we would like to offer you the opportunity to have a no-obligation free analysis of your position with our specialist financial services litigation solicitor, James Taylor. Further information about James and his expertise can be found here.

If you would like to take advantage of this offer then please complete the attached questionnaire, which will enable us to see whether you may have a claim for any losses which you may have sustained. Completed questionnaires should be sent to james.taylor@wards.uk.com

James Taylor
Solicitor
Wards
james.taylor@wards.uk.com
Direct Dial: 01454 204871
Direct Fax: 01454 203921

AVID HOLDINGS PLC SHAREHOLDER ACTION QUESTIONNAIRE

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Address (mail will be marked Private and Confidential):

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Shareholding in Avid

Shareholding in Avid at time of Winding Up:

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Name of Company:

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If in writing please send a copy with your email.

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By returning this questionnaire, I consent to Wards Solicitors holding my personal information as above for the purposes of contacting and advising me on any legal rights I may have arising out of my shareholding in Avid Holdings Plc.