REMEMBER: IF IT SOUNDS TOO GOOD TO BE TRUE, IT PROBABLY IS!

It sounds obvious, but if a stranger rings you out of the blue and tries to sell you shares in companies you've probably never even heard of - take great care.

They may be part of a financial scam using hard-sell tactics to persuade you to buy shares.

If you buy them, you may be left with potentially worthless shares. You may also have no rights to complain or claim compensation from the relevant UK schemes as most of these boiler room scams are based overseas.

The first time you hear from such firms could be by post or email, or they might advertise their services over the internet. They may offer you a free research report into a company in which you hold shares, or a free gift or a discount on their dealing charges.

“Nothing to lose”, you think, “and it's free”. So you sign on the dotted line and send your response in the freepost envelope. You think it must be OK because it’s got a UK address, so if anything goes wrong, you'll be able to complain.

BUT:

If you have been contacted by an unauthorised overseas firm in this way, it would help the Financial Services Authority (FSA), the UK's financial services regulator, if you could give it information on your dealings with the firm using its Online reporting form or calling its Consumer helpline or 0845 606 1234.

If you already own shares in a company, including those traded on AIM, you may receive a call from someone offering to buy your shares, usually at a higher price than their market value.

If the price of your shares is low, the offer will probably sound very attractive to you. They will also ask you to pay something up front, as a bond or other form of security, which they say you'll get back if the sale doesn't go ahead. They could also ask you to sign a form preventing you from disclosing details of the offer.

Don't be fooled by such an approach! It's probably no more than an advance fee scam – where you give them your money and never hear back from them again. They can be very persistent, phoning you many times and even sending you documents or forms to complete.

There has been a dramatic increase in unauthorised overseas share fraud firms using the names, registration numbers and addresses of firms and individuals authorised by the FSA in an attempt to convince consumers of their legitimacy. They even copy the websites of authorised firms, making subtle changes such as using different phone numbers.

Beware – fraudsters are using more high-risk strategies to obtain your money.

Always make sure that the firm you use is on the FSA Register and is allowed to give financial advice before handing over your money. If they aren’t regulated by the FSA, you won't have access to complaints and compensation procedures if things go wrong. To find out if a firm is on the FSA Register, see Check the FSA Register.

However, don't just assume that because their name appears on the FSA Register they are who they say they are. Some callers may use the names of firms or individuals from the FSA Register to make you think they are legitimate. It's unusual for firms to call you out of the blue, so be wary if you're not expecting a call.

If you are in any doubt:

Don’t listen to excuses about the caller using a direct line – if the call is genuine, a trustworthy firm won't mind you being careful! Report any suspicions to the firm and the FSA.

The FSA has published warning lists of firms that it knows operate in this way. However, remember that this type of firm is likely to change its name frequently, so if you can’t find a particular name on these lists that still doesn’t mean it’s genuine. See its lists of Unauthorised firms/individuals and Unauthorised overseas firms operating in the UK.

If you do decide to go ahead and buy the shares: