Simon Read: How to keep boiler-room crooks out in the cold
Saturday 22 May 2010
The City watchdog revealed on Wednesday that it has been given a "hit list" of 38,000 names and contact details of so-called "suckers", people who have been highlighted by boiler-room operators as likely victims. The Financial Services Authority is now in the process of contacting all the people concerned to warn them that they are being targeted.
The boiler-room con is simple. Smooth-talking salespeople ring unsuspecting investors with news of a great share opportunity that no one else knows about. Typically it could be a gold mine that has hit a rich seam that is as yet unreported in the wider world. Or it could be a drugs company which is about to be given the green light for revolutionary cancer treatment or a cure for the common cold.
In all cases, the shares will supposedly rocket when the news becomes widely known, which means victims have a short time to get in while the price is low. Unscrupulous salespeople use alarm-bell phrases such as "once-in-a-lifetime opportunity" or "invest now or miss the boat". In truth, of course, the shares are worthless. So why do people get defrauded in this way?
Despite the often outrageous nature of their claims, it can be easy to be taken in by the con artists. They sound and act professionally and only target seasoned investors – hence the hit list – who may well be used to hearing from legitimate stockbrokers from time to time. But there is one big difference. A legal firm will be happy for you to check them out and call them back. A boiler room won't, as they know that if you check the FSA register at www.fsa.gov.uk/
pages/register/ they won't be listed. In fact most operate from beyond the arms of British law by setting up office in far-flung parts of the world.
Some get round the fact that they're bogus by claiming to be calling from a well-known firm, but if the number they give you differs from the contact details provided in the FSA Register then you know they're not telling you the whole truth. The watchdog says you should slam the phone down if you get a call from boiler-room fraudsters, but it's worth reporting the incident to the FSA on 0845 606 1234 if you are targeted.
The Coalition published its "Programme for Government" on Thursday. As is the way with all of these things, there's a lot of hot air and what may prove to be false promises in the publication. But there is hope for some, not least the 1.8 million poverty-stricken pensioners in the UK. The new government says it will restore the link between the state pension and earnings from April 2011 with a "triple guarantee" that pensions are raised by the higher of earnings, prices or 2.5 per cent. That's a good start, according to Michelle Mitchell, director at charity Age UK. "However in the short-term the coalition must move quickly towards paying benefits automatically so the poorest and most vulnerable older people receive all the financial help they're entitled to," she says.
That must be a priority. The fact that we've let so many older people slip below the poverty line is a scandal and the coalition will get my applause if they actually remedy the situation. The Government has also promised to protect key benefits for older people such as the winter fuel allowance, free TV licences, free bus travel, and free eye tests and prescriptions. I don't think that goes far enough. While it's pleasing that such crucial allowances are continuing, the Government should be looking to boost payments for the most needy.
Green taxes must not pay off deficit
the coalition is planning to hit taxpayers with additional increases to environmental taxes, according to UHY Hacker Young. The accountacy firm claims that green taxes have already jumped 19 per cent over the last two years to £31.9bn per annum.
In comparison, green tax breaks (tax breaks for environmentally friendly activity) are only £1.1bn, representing just 3.4 per cent of the size of green taxes.
"There is worry that the Government's policy will be all stick and no carrot," warns Mark Giddens, partner at UHY Hacker Young. "A more balanced approach with generous tax breaks might actually be much more effective at hitting Britain's CO2 targets."
Giddens calls on the coalition to admit it if green taxes are just to be used to plug the Government's deficit. "What taxpayers want is for green taxes to be recycled into either green investment or used to finance green tax breaks, not to fund the latest pet project," he says.
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