ROBERT JACKSON, 72, has been a successful investor for more than 20 years. But he suspects the broker he has used for the past 10 months is operating a “boiler-room” scam and he now stands to lose £13,000.

Jackson, a retired civil servant from Beckenham, Kent, said: “The broker contacted me and offered me the chance to invest in a company it had identified as a good bet.

“I agreed to buy 60,000 shares at a price of 5p and that first investment turned out very well — I made about £5,000. However, I now think that was probably just a trick to make me trust the firm. I was initially given a London address, but have since found out that the company is based in Spain.”

Over the next few months, Jackson bought shares in a number of companies on the broker’s advice. However, none of these investments was as successful as the first. He has also had problems obtaining his share certificates.

Jackson said: “On two occasions the money from the sale of the shares I bought in one firm has been used to buy different shares without my consent, and I still don’t have the share certificates for a company I apparently bought in September. I’m very angry and concerned.”

He does not want to name the company for fear it will jeopardise any future claim for compensation. However, the Financial Services Authority (FSA), the City watchdog, is also alarmed by the broker’s activities. It recently posted a list of unauthorised overseas firms on its website (fsa.gov.uk/enforcement/ firms_overseas.html), along with a warning about so-called boiler-room scams.

Jackson said: “The broker’s approach was very professional at first, but the last person I spoke to was quite rude. I am planning to contact the Spanish regulator to see where I stand on compensation and would warn others to be very careful.”

The typical victim of a boiler-room scam is a middle-aged professional man with investment experience, according to the FSA.

The scams are not all the same. Some companies use hard-sell tactics to encourage you to buy shares that promise huge returns, but turn out to be worthless; others sell shares in companies that do not even exist. Many disappear without a trace soon after you make your investment.

The FSA receives about 100 calls a month from people who are taken in by these scams. Kate Burns of the FSA said: “The returns promised are generally unrealistically high, but our research shows that it is not naive investors who are getting caught out — more often than not it’s people who know what they’re doing.”

At least 100 companies are known to be targeting British investors with boiler-room scams. The FSA’s powers are limited because they are usually based overseas, although many use a British forwarding address. This also leaves investors unable to claim compensation from UK organisations when it all goes wrong.

Boiler-room scams are often advertised as “discount brokers” on the internet. You might also be contacted by post or e-mail with an offer of discounted dealing charges or a free report into a company in which you own shares.

If you sign up for a report or discount, you might inadvertently agree that the company can contact you again. The firm is then free to target you without breaking British laws that forbid companies from cold-calling about financial services.

The investments on offer are not always shares. The FSA is also aware of scams promoting options, futures and currency dealings. It recommends that you check firms are authorised in the UK before signing up to buy shares. You can do this by calling the FSA helpline on 0845 606 1234. Another tip is to check any share prices in the financial press or with an authorised broker.

The FSA also warns investors to be on their guard against a number of other scams, including pyramid schemes and bogus e-mails, known as “phishing”.