Tyas & Company Chartered Accountants, Crawley
Boiler Room Scams
What they are and what to look out for
We take our clients’ financial security very seriously. So we wanted to highlight the threats around so-called Boiler Room Scams. There’s no need to worry but as the saying goes, forewarned is forearmed.
What is a Boiler Room?
Boiler Rooms are businesses that use high-pressure sales techniques to sell “sure thing” investments with the promise of massive returns. In fact, what they’re selling is worthless stock in often unquoted companies that are either overvalued, or simply don’t exist at all.
How they work
Boiler Room operatives generally cold-call their targets, using phone numbers from publicly available shareholder lists. Because it’s against the law for investment companies to cold-call in the UK, they tend to be based abroad (often Spain, Switzerland, or the US) where they’re beyond the jurisdiction of the Financial Services Authority (FSA).
Boiler Room Techniques
A Boiler Room can look and sound legitimate. They may mention companies you’ve heard of, give themselves a UK address or phone number and have a professional looking website. They’re notoriously persistent, and can hound a victim for months in the hope of a sale, catching out even seasoned investors. According to the FSA, Boiler Room Scan victims lose on average £20,000.
Remember, as a general rule, if an opportunity sounds too good to be true, then it almost certainly is.
What to do if you’re called
If you think you’re being targeted by a Boiler Room, the FSA’s advice is not to worry about being polite, just hang up. You should then dial the FSA contact centre on 0845 606 1234 with as much detail as you can remember. You’ll find more information about Boiler Rooms on the FSA website www.fsa.gov.uk.
We hope you’ve found this information useful but if you have any questions, about staying safe, give Tyas & Company a call and we’ll be happy to help.