Warning of massive boiler room scam

The City watchdog is contacting more than 49,000 people to warn them that their names were on a list being used by fraudsters trying to sell worthless shares.

The move comes after the Financial Services Authority recovered its biggest ever master list of names being used in so-called boiler room scams.

The list, the fourth one to be recovered this year, contains the names, addresses and telephone numbers of 49,387 people, who are mainly in London, but with significant numbers also based in Scotland and the South East.

The regulator is writing to everyone whose details appear on the list, explaining the steps they can take to protect themselves from boiler room fraud, and telling them what they should do if they think they may already be a victim.

Boiler room scams involve fraudsters using high pressure sales tactics to con investors into buying non-tradable, overpriced or even non-existent shares.

They are thought to cost the UK around 200m a year.

The firms selling the shares are not regulated by the FSA, meaning consumers do not have access to the Financial Ombudsman Service and Financial Services Compensation Scheme if things go wrong.

The latest list, which was recovered through work with the US Homeland Security Investigations and Internal Revenue Service, is thought to still be in use by fraudsters operating in the UK and overseas, and it is likely to have been circulated between different boiler room networks.

Margaret Cole, the FSA's managing director of enforcement and financial crime, said: "So far this year we have contacted 95,000 people across the UK to warn them about the risks of investing via boiler room fraudsters.

"This latest list is the biggest we've ever recovered and we are contacting every single person on it in the hope we can stop people losing money.

"Even if only one in 10 (people) we contact heed our warning it could mean around 96m is not invested in these scams."

The FSA has received around 4,000 calls from people who have been contacted by boiler rooms so far this year, around 1,000 of whom were victims, who lost an average of 20,000 each.