Banks take action on share scams

[Legal Beagles]

Some UK banks are screening customer transactions to clamp down on so-called "boiler room" fraud, the BBC learns.

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Page last updated at 11:17 GMT, Saturday, 11 July 2009 12:17 UK
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Banks take action on share scams


By Bob Howard
BBC Radio 4's Money Box


Investors are under continual threat from so-called "boiler rooms"

Some UK banks have begun screening customer transactions to clamp down on so-called "boiler room" fraud.
The Financial Services Authority estimates up to 30,000 people a year are losing hundreds of millions of pounds to these share scams.
It happens when criminals call potential investors attempting to sell shares which are effectively worthless.
Barclays and HSBC have told the BBC they suspend transactions if they are being paid to known boiler room firms.
The two banks use a warning list published by the Financial Services Authority (FSA) which contains the names of hundreds of companies.
The FSA says the companies are not authorised and pose a high degree of risk to customers.
We will delay payments until we have checked with our customers


HSBC spokesman

Barclays told BBC Radio 4's Money Box programme it had blocked around 150 transactions since introducing a screening system in February, potentially saving customers millions of pounds.
It said although around 90% of customers contacted chose to cancel the transaction once they were told the company was on the warning list, 10% insisted on it going through.
HSBC has been screening transactions since 2006 and also said it has saved its customers millions of pounds.
A spokesman told Money Box: "If we receive requests for payments to any of these companies we will delay payments until we have checked with our customers to ensure that they are aware of the company's activities.
"Usually, when customers realise that the companies in question are on the non-authorised list, they want to stop the payments."
Lloyds TSB and Nationwide would not comment on their security procedures.
Operation Archway
The Financial Services Authority has been working with police officers from Operation Archway in London for several years to try to tackle boiler room fraud.
Officers say fraudsters often persuade investors to part with tens of thousands of pounds and they get about 100 calls a week from victims.
There's a certain amount of intrusion about it, so one has to be careful about promoting it too much


Detective Superintendent Bob Wishart

Detective Superintendent Bob Wishart told the programme the banks are playing a significant role in reducing losses.
"We're having some notable successes. If we can help them identify potential fraud and a bank is a 100% happy that it is a potential fraud, then it can take the appropriate action," he said.
Jonathan Phelan, FSA head of Retail Enforcement, agrees the banks are making an important contribution but believes there are limits to how successful screening by banks alone can be.
"We are in discussion with banks," he added. "It is a very difficult area. There's a certain amount of intrusion about it, so one has to be careful about promoting it too much."
The Financial Services Authority and the police insist they are having some success at closing down and prosecuting the criminals involved.
The FSA said it has recently closed down six boiler room agents and recovered close to three million pounds of investors money from four boiler room operations.
Officers from Operation Archway said they are currently involved in a dozen major boiler room investigations.
The FSA says it is illegal for any broker either in the UK or abroad to cold call customers and anyone who receives such a call should hang up immediately.

[righty]

Re: Banks take action on share scams

"10% demanded the transaction continue" - yeah right I don't believe it - more hype