When is a cold call not a cold call?

This scammer says that because I allegedly showed interest in an investment two years ago, I still qualify as a hot lead!

When is a cold call not a cold call? According to the lovely sales folk, it's when the communication is 'warm'. Whenever I complain about a cold call, I am always told that I am a warm prospect because I had requested the call.

But even if that is true (rarely, if ever) how long should there be between the request and the return call? A day? A week? Even a month is tolerable, although if I took a month to respond to a reader enquiry, I could be accused of gross inefficiency.

Now what about nearly two years? Even the hottest call must become freezing cold by then. But that's what Andy, who phoned me from what sounded like a low-cost boiler room, told me.

A freezing cold 'warm' call

“Hi, Anthony,” he said. “Are you still trading markets?” That's far from the usual opening line so I was taken aback.

So it was “Who are you?” and “What are you talking about?” and “I don't believe I've ever had the pleasure of your acquaintance” before Andy put me right.

“Don't you remember me?”, he asked. And before I had a chance to say “no”, he informed me that he had phoned in autumn 2011. Therefore, in his mind (or at from least the script he was reading), I was a red-hot prospect, not a victim of cold calling.

There was no way I could check whether that call nearly two years ago had really been made. And asking him where the original lead had come from for that call would produce the usual vague answers such as “from a list” or “you responded to an online site” (never defined) or – hardest to challenge - “I don't know”. All of these answers translate as "My firm does not care about Telephone Preference Service."

Contracts for difference

He wanted to know if I was still interested in trading markets. I'm not and have never been inclined to, but I assured him that I was fascinated.

He told me he worked for a firm of advisory stockbrokers who majored in “contracts for difference”. These are one of the several ways to take racecourse-style bets on stock markets. If that's what you want, that's fine, but these gambles tend to favour the bookmakers or stockbrokers so that sometimes only around one in five is profitable for investors.

But that's not how he put it. He said that if I wanted to buy £10,000 of Lloyds Banking Group shares it would cost me £10,000 plus £50 Stamp Duty. If the price increased 20%, I would have £12,000. However, via a stamp duty free contract for difference, I could obtain an interest in those shares for £1,000 and the same increase would give me a £2,000 profit – not a 20% but a 200% gain.

What he didn't tell me

What he did not tell me was that a small movement the other way – say a 10% fall – would wipe my £1,000 contract for difference out. Any more, and I could be owing money. Paying full price for the shares would obviously allow me to ride out losses and gain from subsequent upwards moves.

To be fair, the firm's website does have the warning: “Trading in these markets is generally considered to be suitable only for the more experienced investor as it carries a high degree of risk. An investor may not receive back the amount of their original investment and in certain circumstances may be liable for a sum that is greater than their original investment.”

So why didn't Andy tell me that?

Andy told me his firm was regulated by the Financial Conduct Authority (which, incidentally, bans investment cold calling). So I checked. He was right.

I looked at the firm's regulated individuals. There were no disciplinary black marks against any of them. But I also took a peek at these people's past employment. The majority had worked for a derivatives investment firm which had gone bust, and before that, for another contract for difference merchant where a number of the principals had been convicted and jailed for insider trading.

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