The FSA is concerned about customers being unable to trade because of the difficulties some better known private client firms have experienced in coping with the flood of business. A number have had to draft in extra staff and close some accounts to new business following complaints that phones have not been answered and websites have been freezing up.
The FSA has also been concerned to ensure that those investors who are buying shares for the first time fully appreciate the risks.
Christine Farnish, director of consumer relations at the FSA, said: "Consumers investing their money in smaller company shares need to know that the price of those shares can be very volatile - both up and down. They need to think carefully about the risks involved before deciding what shares they buy and how many."
Angela Knight, chief executive of the Association of Private Client Investment Managers and Stockbrokers, has complained to the FSA about the Channel 4 television share-tipping programme Show Me The Money, which has contributed to the share buying frenzy.
She said: "We are concerned that it is not giving the right kind of message. Some shares shoot up before the programme and shoot back down again afterwards. That is not investment."
The series ended last Friday and Channel 4 says it has not yet decided whether to commission a further series.
Earlier this week Lindsay Thomas, head of the FSA's securities firms supervision department, met half-a-dozen of the top execution-only brokers to discuss ways to tackle the bottlenecks. He called on big brokers to ensure that firms were able to cope in the event of demand soaring still further in the coming weeks.
Justin Urquhart-Stuart of Barclays Stockbrokers said he believed the number of private clients had doubled from 250,00 to 500,000. "I have never seen anything like it," he said.
Brokers say that volumes of retail trading are running at 70,000 to 80,000 trades a day - double pre-November levels - with some firms seeing volume triple or even quadruple in the space of a few days.
One of the most popular shares is 365, a sports and entertainment Internet company, whose price has soared by almost 60 per cent since it floated last week. Brokers insist that buying is across the board, with telecoms and Internet stocks the most sought after.
Barclays Stockbrokers, one of the biggest private-client firms, has had to close some of its business to new investors. Charles Schwab is drafting in new people for its main call centre in Birmingham. In the meantime it is encouraging callers to use its Web service instead.Reuse content