It's easy to scoff at people who fall for financial scams. Shouldn't they have more sense? But the most common victims of so-called boiler-room scams are experienced investors, who typically lose £20,000 each to the fraudsters. A boiler room is a bogus stockbroker, usually based overseas, which cold-calls investors and pressures them into buying worthless shares. Their favourite targets are middle-aged men with previous experience of buying shares, whose names they find on share registers.
The fraudsters are usually well spoken and knowledgeable, says Richard Evans in The Sunday Telegraph. They are also persistent. They might call their victim several times with offers of research, discounts on stocks in small overseas companies, or shares in a firm that is about to float. Boiler rooms make their money in one of two ways. They might simply take your money and walk away. Or they might sell you shares, but at vastly inflated prices and with exorbitant dealing charges.
The Financial Services Authority (FSA) is warning people to check its website both for a list of boiler rooms (www.fsa.gov.uk) and to find out if the so-called stockbroker is authorised in the UK. The regulator is unable to take action if the boiler room is not based or authorised in Britain, says Jessica Bown in The Sunday Times, so victims are vulnerable as they will not be able to claim compensation from the FSA or the Financial Ombudsman Service if something goes wrong.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Brown's U-turn on trusts tax
There's nothing journalists like better than a Government climbdown and for the latest climbdown, they deserve some of the credit. In the March budget, the Chancellor Gordon Brown slapped a tax charge on trusts with assets above the inheritance-tax threshold of £285,000, rather disingenuously suggesting it would only affect a handful of people. But tax experts quite rightly made a bit of a stink and the issue hit the headlines. There has since, therefore, been a partial U-turn, which will grant a reprieve to hundreds of thousands of people, says Lucy Warwick-Ching in the Financial Times Money magazine.
The amendments exclude trusts set up before the March budget. But you could still be caught out if you set up a new trust, or you change an existing arrangement, warns Kathryn Cooper in The Sunday Times.
Protect yourself against licence loss
You've got to hand it to insurers: they can certainly spot a money-spinner. Isle of Man Assurance now offers the LicenceGuard car-insurance
policy, which will reimburse your travel costs every month for a year if you lose your licence because of speeding. You can get the money back for train tickets, taxi fares, even a chauffeur (but sadly, not a boat or a plane), says Lucy Warwick-Ching in FT Money.
The premiums start at £65 a year, allowing you to claim back up to £6,000 of annual travel costs. The top-notch Platinum policy costs £125 a year and gives you annual cover of £15,600. There are now so many speed cameras that one in four households has a driver with at least one conviction, so you can understand why the policy might be popular.
-
Private school fees soar and VAT threat looms – what does it mean for you?Rising private school fees could see more than one in five parents pull their children out of their current school. Before you remortgage, move house or look to grandparents for help, here’s what you need to know.
-
Best and worst UK banks for online banking revealedWhen it comes to keeping your money safe, not all banks are equal. We reveal the best and worst banks for online banking when it comes to protecting your money from scams
