Financial Conduct Authority accused of failing to crack down on boiler room scams
07 Sep 2020

Only four boiler room scams were prosecuted by the City regulator over the past five years, despite its warning that people were losing their homes and savings to “sophisticated” frauds.

The Financial Conduct Authority (FCA) also admitted that no boiler rooms had been shut down as a result of its activities over the past 12 months and could not say how many staff it had dedicated to the problem. Consumer campaigners said the findings showed that the regulator was “not performing its statutory functions”.

In boiler room scams, fraudsters call people out of the blue to offer worthless, overpriced or even non-existent assets such as shares or bonds, using high-pressure sales tactics.

The authority says that victims can lose “all of their savings or even their family home”. In 2013, Tracey McDermott, then the regulator’s director of enforcement and financial crime, said that the FCA had “very experienced teams of people able to combat these boiler room frauds”.

Yet when asked last month how many people were employed in these teams, the authority said in response to a freedom of information (FOI) request that it did not hold a record of the “number of staff who work only on share fraud or boiler room fraud”.

It said this was because while “there is a specialist team . . . primarily dealing with clones and scams (including boiler room fraud), there are a number of other areas across the FCA that also deal with work related to this subject”.

In its FOI response, the FCA said there had only been one prosecution between 2014 and 2019, but last night it said this was an error and that there had been four.

By James Hurley, The Times, 5 September 2020

Read more at The Times

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