Two UK banks have begun screening customers’ transactions in order to combat so-called boiler room scams.

Boiler room fraud involves criminals ringing potential investors and persuading them to buy shares which are effectively worthless.

The Financial Services authority estimates that up to 30,000 a year are falling victim to these scams.

HSBC and Barclays bank are now suspending transactions to known boiler room firms, using a list of hundreds of questionable companies published by the FSA. The regulator says that these companies are not authorised to trade, and pose a high risk to consumers.

Barclays has already blocked 150 transactions made to shady companies since it introduced the screening system in February, potentially saving customers millions of pounds. The bank said that around 90% of the customers it had contacted chose not to go ahead with transactions they had been warned might be fraudulent. However, the remaining 10% of customers decided to make the transaction regardless.

HSBC has been blocking transactions since 2006, and said it had also prevented customers from losing millions of pounds.

A spokesman for the bank said: “If we receive requests for payments to any of these companies we will delay payments until we have checked with our customers to ensure that they are aware of the company’s activities.

“Usually, when customers realise that the companies in question are on the non-authorised list, they want to stop the payments.”

The FSA has been working with police officers on Operation Archway to tackle boiler room fraud. The regulator gets around 100 calls a week from investors who have been persuaded to part with thousands of pounds in fraudulent deals.

The FSA said it has recently closed down six boiler room agents and recovered nearly three million pounds of investors’ money from four boiler room operations. Six more boiler room firms are currently under investigation.

It is illegal for brokers in the UK and abroad to cold call customers, and anyone offered shares by phone is advised to hang up immediately.

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