WIREDGOV

The Financial Services Authority (FSA) is contacting 76,732 people to let them know they are targets for fraudsters trying to con them out of their money.

Their names appeared on a number of lists recovered from companies that the FSA believes were fraudulently selling investments in land or worthless, sometimes non-existent, shares.  Combined into one list, this is the largest number of target victims that the FSA has ever contacted in one go.

Letters from the regulator will be arriving on people’s doormats from today. Most of the list contains the names and addresses of the targets, but in 19,101 cases only email addresses are listed, therefore the FSA will be sending those people an email warning.

The letter, which can be found online, provides tips on how to spot a scam, avoid becoming a victim and what to do if you have already invested. Recipients should be aware that the FSA will not call them for further information and will never ask for money, bank account or personal details.

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 you 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.”

The FSA has a team ready to answer questions about the letter and investment scams generally who can be contacted on 0845 155 6355. Several high street banks have also provided phone numbers for their customers (callers should quote ‘Operation Bexley’):

• Adam & Company - 020 7770 0015
• Bank of Scotland – 0845 606 2196
• Barclays Bank – 0800 051 6195
• The Co-Operative Bank – 0845 602 9402
• Coutts & Co – 020 7770 0011
• Halifax – 0845 601 6954
• HSBC – 0845 600 9961
• Lloyds TSB – 0845 600 1928
• NatWest – 0845 605 0789 (overseas +44 870 243 0464)
• Royal Bank of Scotland – 0845 600 8212 (overseas +44 131 317 4597)

People that have invested are encouraged to contact the FSA directly by phone or make a report via the online reporting forms on the Operation Bexley webpage.

Given the large number of names on the list and the high volume of expected incoming calls to its contact centre, the FSA will be sending the letters and emails out in waves. The first 10,000 letters will arrive today and a further 10,000 letters will be sent each week. The first 5,000 emails will be sent on 30^th April, with a further 5,000 each week.

The largest list was recovered from the premises of a firm which the FSA believes was operating an unauthorised business, but cannot be named due to ongoing legal action. All of the lists are believed to be current and were being used to either sell fake or worthless shares, or plots of land with the promise of great investment returns once developed – even though this was unlikely to ever happen.

Jonathan Phelan added:

“These lists are nothing more than fraudsters’ phone books and the people that use them are ruthless, calculated 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.

“We would like to extend our thanks to all of the banks that have created dedicated help lines for their own customers. Contacting over 75,000 people is an enormous task but the assistance they have provided means we are able to contact and offer help to a vast number of people as quickly as possible.”

The FSA recommends the following steps for people that have been contacted by a firm offering to buy or sell investments:

• be especially wary if you are contacted out of the blue;
• check the firm or individual’s status on the FSA Register;
• call the firm back on the switchboard number provided on the FSA Register to make sure that the call came from the legitimate authorised firm;
• check the FSA’s ‘warning list’ to see if the FSA has published a warning about  the firm;
• consider getting independent financial or professional advice;
• remember that if it sounds to good to be true - it probably is; and
• if in doubt – contact the FSA.

A suite of videos that explain how to spot and avoid being scammed by unauthorised businesses are available on the FSA’s website. The videos cover three types of scam: land banking, share fraud, and get-rich-quick schemes.

Boiler rooms usually contact people by telephone and use high pressure sales tactics to con investors into buying non-tradable, overpriced or even non-existent shares. They are unauthorised, overseas-based companies with bogus UK addresses and phone lines routed abroad.  

Land banking companies divide land into smaller plots to sell to investors on the basis that once it is available for development the plot will soar in value, but the land often has little chance of being built on. Land banks also use cold calls and pressure selling to convince people to invest. The FSA does not regulate the sale of land, but land banking may amount to a collective investment - something that does require FSA authorisation. 

Unauthorised firms are not covered by the Financial Services Compensation Scheme therefore should somebody invest through an unauthorised business, it is highly likely they will lose their money if the firm goes bust or disappears.

Notes for editors

1. The letter being sent to people on the list can be found on the FSA website.
2. The FSA’s videos on land banking, boiler room fraud and get-rich-quick schemes can be found on its website, and can be embedded on other websites.
3. The FSA recently revealed that while boiler room fraudsters are making greater efforts to scam investors they are meeting with less success: in 2011 about 14 per cent of people called by share fraudsters invested while in 2006 it was around 60 per cent.
4. The FSA has previously recovered other lists and written to over 100,000 potential victims of share fraud. The press releases can be found on the FSA website: 7 December 2010, 19 May 2010, 15 March 2010, 1 February 2010, and 8 December 2008.
5. In 2011, the FSA secured four criminal prosecutions for boiler room fraud: David Mason, and Tomas, Kevin and Christopher Wilmot.
6. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; securing the appropriate degree of protection for consumers; fighting financial crime; and contributing to the protection and enhancement of the stability of the UK financial system.
7. The FSA will be replaced by the Financial Conduct Authority and Prudential Regulation Authority in 2013. The Financial Services Bill currently undergoing parliamentary scrutiny is expected to receive Royal Assent by the end of 2012.