HAVE you heard the one about the honest politician? Me neither.

Although con-merchants have been around since the dawn of time, it is not just greedy politicians with moats and duck houses that you need to watch out for.

In recent weeks, the recovery in stock markets and an improvement in investor confidence has led to a resurgence in the activity of fraudsters operating “boiler room” investment scams.

Boiler room investment scams involve teams of bogus salesmen, cold calling investors to try to persuade them to buy shares in companies which ultimately have little or no value.

These fraudsters are usually very well spoken, knowledgeable and extremely persistent.

They normally call their victims several times, building up a rapport with offers of free research, discounts on dealing charges or tips for small overseas companies with huge growth potential.

They make their money in one of two ways. At best, they might sell you shares at vastly inflated prices and with exorbitant dealing charges. At worst, they simply take your money and walk away.

In the space of only a few weeks, I have received half a dozen calls, not only from the scammers themselves, but, more worrying, from people who have become victims of these highly convincing, slick talking despicable tricksters.

In one particularly distressing case, I was contacted by an elderly gentleman who, over time, had been persuaded to invest nearly £70,000 of his life savings into a series of small overseas companies, completely unaware that the certificates he had received in return were virtually untradeable and not worth the paper they were printed on.

A second gentleman, who was persuaded to invest part of his redundancy into a “sure thing”, also contacted me after he could no longer contact the original broker when they vanished into thin air only a few weeks after he dispatched funds into their overseas bank account. Unfortunately, these are not isolated cases.

The Office of Fair Trading (OFT) estimates that nearly ten per cent of UK adults fall victim to a multitude of scams each year, losing a combined sum of £3.5bn.

It is not just elderly people or novice investors that get duped. According to the UK’s investment watchdog – the Financial Services Authority (FSA) – nearly half of boiler room victims class themselves as experienced investors, having been investing for more than ten years, with only 12 per cent having never purchased shares before. So, how do you protect yourself from these increasingly common scams? I know it sounds obvious, but if you really want to invest funds into the stock market, do a bit of research on the investment and the broker firm first.

Don’t just trust a flashy website, a legitimate sounding name or fancy letterheads as evidence of quality.

Always ensure that the broker firm is on the FSA register and is authorised to give financial advice before handing over your money.

If you have access to the internet, you can check this via fsa.gov.uk/pages/register.

Alternatively, call the FSA helpline on 0845-606- 1234, which has a list of all known current boiler room schemes. If a broker is not on the FSA register, or is unauthorised, then they are best avoided, as you will have little protection under the UK Investor Protector Scheme, should things go wrong.

* Mark McMullan is an assistant director in the Teesside office of Brewin Dolphin, and can be contacted on 0845-213-1340. All prices quoted in the article are from public sources. The views expressed are not necessarily held throughout the Brewin Dolphin Group. You should bear in mind that no investment is suitable for all circumstances and it is important to seek expert advice if in any doubt.

Brewin Dolphin Limited is a member of the London Stock Exchange, authorised and regulated by the Financial Services Authority.