“Hi Wilfred, Good afternoon. I am doing a research for land banking investment and would appreciate your kind advise. Last weekend, I attended a seminar organised by X on Land Banking in UK. We listened to the seminar with an open mind. In fact, after the whole presentation, we were rather attracted to this investment. The sales people were not pushy either. However, we also did out homework by searching on the google map and other internet website. I understand that there are many scams on UK land previously. What is troubing me now is how to verify if X's promises are true or not. How do I know if this is going to be yet another scam. Appreciate and look fwd to your kind advice – J”

Dear J,

You are right to say that many land banking scheme in UK turns out to be a scam. However, it is impossible to know whether is the promise true or not since a promise is only as good as the paper contract. The risk of investing in land banking is further increased by the fact that MAS does not regulate the sale of land banking products. The reason why MAS does not regulate land banking is merely because of a legislative red tape as land banking is not classified as a security but as a "real-estate". This legislative red-tape is rather unfortunate since land banking is obviously an investment product that should be regulated.

The lack of regulation does not automatically mean land banking is a scam. However, it means that if there is a dispute between you and the company, you cannot rely on MAS or any regulatory body or FIDREC to help you. You are only left to deal with the dispute through civil action such as contract law. Having a regulator at your side is very important. You do recall that due to the massive misselling of Lehman Brothers linked products, MAS pressured the institutions to compensate and imposed certain penalties on them. MAS can do this because these institutions and the product concerned were regulated. If it is not regulated, MAS will not do it.

The high number of UK land banking scam and the lack of regulation should be considered as part of the risk in such an investment. Of course, like all real-estate investment there are other usual investment risks such as liquidity risk, market risk, foreign currency risk, taxation risk and foreign government legal risk.

There are many regulated products in Singapore that can meet the needs for all situations. There is no reason to invest in a non-regulated product and worry over it.

Wilfred