FSA Warns Investors Of Financial Frauds

Published in Investing on 24 April 2012

The financial watchdog has contacted over 76,700 people targeted by 'boiler room' scams.

City regulator the Financial Services Authority (FSA) is writing to 76,732 people to warn them that they are being targeted by financial fraudsters.

Boiler rooms and land-banking

As part of a campaign dubbed 'Operation Bexley', the financial watchdog is sending this warning to people whose names appeared on lists recovered from companies that the FSA believes were fraudulently selling unauthorised investments.

These unlucky folk include those at risk of being duped by boiler rooms: high-pressure sales operations set up to lure investors into buying over-priced, worthless or non-existent shares. Other potential victims appeared on lists belonging to land-banking firms, which sell small plots of green-belt land to unsuspecting investors at sky-high prices.

Operation Bexley is the largest campaign of its kind, as the FSA has never before contacted so many victims in one go. These letters will start arriving through letterboxes from today, but 19,101 will be sent by email, as the FSA does not have the names and addresses of some targets.

To stagger this process, the FSA will send out 10,000 letters today, followed by 10,000 per week until every potential victim has been contacted. The first 5,000 emails will be sent on 30 April, followed by a further 5,000 each week.

Also, it's crucial to note that the FSA will not contact you for further information and will never ask for money, bank account or personal details. Hence, any follow-up contact is sure to be a sham.

Tips on avoiding scams

In its Operation Bexley leaflet, the FSA includes tips on how to spot scams and avoid becoming a victim, plus what to do if you have already handed over money to dubious companies.

Jonathan Phelan, the FSA’s head of unauthorised business, said:

"If you get a letter or email from the FSA over the next five or six weeks, please read it -- it could save you tens of thousands of pounds. If you have already been contacted by a firm offering you a 'once in lifetime' investment opportunity, or have already invested, then tell us. The information you have could help us catch criminals and shut down their scams."

Getting help

The FSA has already set up a team to answer questions about the letter and on investment scams in general. This hotline number is 0845 155 6355. Also, these 10 banks have kindly agreed to provide advice for worried customers (callers should quote 'Operation Bexley'):

Adam & Company020 7770 0015
Bank of Scotland0845 606 2196
Barclays0800 051 6195
The Co-Operative Bank0845 602 9402
Coutts & Co020 7770 0011
Halifax0845 601 6954
HSBC0845 600 9961
Lloyds TSB0845 600 1928
NatWest0845 605 0789 (overseas +44 870 243 0464)
Royal Bank of Scotland0845 600 8212 or 0131 317 4597

Those who have already put money into these iffy investments should contact the FSA directly by telephone or via the online reporting form for Operation Bexley.

Too good to be true

The FSA goes on to warn all investors:

"These lists are nothing more than fraudsters' phone books and the people that use them are ruthless, calculating and will stop at nothing to steal your money. A call out of the blue is one of the hallmarks of investment scams, so if you ever get an unexpected call with promises of fantastic returns, you should be extremely sceptical."

Such scams often have these three hallmarks in common:

1. Contacting you 'out of the blue';

2. Promising fat returns with little or no risk; and

3. Being vague about how these outsized returns are made.

If you are approached by any company offering you high returns on your money, then always check the firm's status on the FSA Register. Also, call the company on the switchboard number provided by the FSA to ensure that the call did indeed come from a legitimate, authorised firm.

In addition, check to see if the firm is on the FSA’s warning list. If in doubt, seek advice from a trusted professional, such as a solicitor or independent financial adviser.

Finally, do remember that 'get rich quick' schemes that sound too good to be true are almost always bogus!

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Comments

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GoldenSoldier 25 Apr 2012 , 1:50pm

Cliff, you quote the FSA Register which has a list of unauthorised firms.

To my mind it should not be necessary for people to be cautious about known unscrupulous firms. What I don’t understand is why the FSA is unable to be proactive and get these crooks heavily fined and put out of business.

tru2me 25 Apr 2012 , 2:18pm

GoldenSoldier may it not be the case that the FSA have to gain information or evidence in order to ...
get these crooks heavily fined and put out of business.

Cliff another area where I have received the odd telephone call is the carbon credit market.

Trouble is the scamming industry appears to be lucrative and growing.

I have resorted to asking the caller to wait a minute ...
Then I just leave the phone unattended till the caller gets bored of waiting.

They don't seem to want to call back.

longpod 25 Apr 2012 , 4:22pm

Just because a firm appears on the FSA register does not mean that it is safe to invest, as many scams involve cloning a genuine company.

ANuvver 25 Apr 2012 , 9:27pm

Wonder if the "sucker lists" in question include the timeshare business - I'm on one of these databases aro being executor to my late father.

If my experience is anything to go by, the problem isn't so much aggressive sales from any individual operation as the fact that the information has been flogged to hundreds of them.

I'll usually just say "not interested" and hang up but sometimes I like to have a bit of fun with them. On occasion, I've even gone so far as to ask the sales "agent" to look around the office and try to pick out someone who's been there more than a couple of months. Then make the point that these outfits have no qualms about conning their own people on commission payments.

ArkWelder 25 Apr 2012 , 11:01pm

GoldenSoldier

Many of these companies are based abroad where regulations are a lot more lax than they are in the UK, so they are outside the FSA's jurisdiction. The FSA does try to get the local authorities to do what they can, though. Even if a web-site says that they have offices in the UK, these are not always what they seem: serviced offices, mailboxes (so only a postal address operated by an unrelated 3rd party).

vmg101 15 Jun 2013 , 11:12am

There is a "boiler room" type scam circulating promoting the shares in Resolution. Fraudsters purporting to be from Novum Capital have contacted private shareholders to persuade them to open an account with them. This scam has become more sophisticated.

Novum Capital is a legitimate business and is FCA Authorised so if you check with the FCA they will confirm that the company is genuine.
Th UK address used by the fraudsters will also appear genuine because it is indeed the UK office of the real Novum Capital.

BUT NOVUM DOES NOT SELL SHARES TO PRIVATE INVESTORS AND HAS NO CONNECTION WITH THESE FRAUDSTERS.

If you get such a call from a broker or investment adviser, the only sure way to check is to obtain the firms contact phone number from the FCA and call that - NOT any number given by the person promoting the shares, no matter how convincing their marketing material might seem. The fraudsters might also direct you to look legitimate website and use an email address confusingly close to the real thing. SO BE ALERT

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