Don't fall for the Suffolk scammers!

Most investment scammers claim to be based in London, but not this one.

Suffolk is a great county. It boasts magnificent coastlines, great resorts, country lanes made for cycling, breweries, and historic churches and villages rich in history.

But I don't think I would offend even the most fervent inhabitant if I said that Suffolk is not known for its investment industry.

So when Paul phones me – on my mobile, for which only a carefully selected few have the number – and tells me he is calling from a Suffolk market town, the last thing I expected was an attempt to sell me shares in a South African venture.

His first few calls – and he has become quite insistent – actually produced the right dialling code for the area. But when I tried the number, it was non-existent. In later attempts to get me to part with my cash, Paul decided to hide his outgoing number. He could have been anywhere, so why Suffolk? These guys usually claim to be in "the City of London” which would seem the 'right' location for investments.

Investing in a platform

He wants to sell me shares in a South African company which runs an investment platform. It already has some form of exempt or restricted listing in an obscure tax haven country but it is, apparently, going to London's Alternative Investment Market (AIM).

Platforms allow investors to have one home for all their holdings, including unit trusts, investment trusts, bonds and equities. Most are used for collective investments by IFAs acting for clients. The advantage is easy switching and a consolidated statement for tax and other purposes. There are a number of well established UK firms offering this. It's a competitive market.

Paul tells me the South African company wants to expand into the UK from its home base, where it is the largest single provider of such services. So off to the search engine where I enter “South Africa investment platform”. As the biggest, I expected it to feature high up the list. But it is nowhere. There are lots of others - some well known in Europe as well - but Paul's firm is noticeably absent. I play around with variations on the theme. I scroll through the fourth or fifth page.

Still nothing.

So when he calls for the eighth or ninth time, I ask him why what should be the most prominent provider in South Africa is absent. He responded: “Why is that important to you?” I would have thought that was obvious. He did give me a website address which was a company which mentioned a number of investments, but that proves nothing.

You don't get to be the biggest in a very significant market without leaving a search engine trail. I am still waiting for a satisfactory answer to that.

Oddly enough, I find there is a company registered in South Africa. It was established in January 2010. But, despite its claimed market leadership, official records show it has never filed accounts.

Why will it succeed in the UK?

I am charitable – it's that season. So I take it on Paul's word that the platform is both real and massive in South Africa. “So why,” I ask “do you think it will become huge in the UK?”

I must admit that I did not understand his answer. “We pay intermediaries more but charge investors less.”

I pushed him on this. He mentioned a 1.4% charge and how the firm manages capital for investors (which is not what a platform does) but I still cannot work out how he squares the circle.

Watchdog the Financial Conduct Authority has a few rules. Besides not cold calling to sell shares, these also include a ban on involvement by non-regulated firms in equity investment. Paul told me he did not need approval as the firm was regulated in South Africa and there was a forthcoming London listing. This is rubbish.

Paul sent me a prospectus that's about 18 months old. It explained that the “business model is designed to create a mushroom effect emanating from financial professionals that will empower their clients to take full ownership of their investment instruments whilst maintaining relationships with their fund managers”.

I don't know what that means. But the prospectus shows turnover and profit numbers multiplying exponentially over the next few years.

There are a few things we do know about market leaders. It is tough at the top and any increase you make from number one is bound to be small. If a firm is already the biggest in a very competitive area, the best it can hope for is incremental gains, not hundreds upon hundreds of percentage points.

This is a clever boiler room but ultimately just another attempt to separate me from my money.

More on scams:

Don't fall for this supermarket voucher scam

Why this property 'investment' was wound up by the High Court

The only thing 'guaranteed' with this scam is that you'll lose your money!

The growing popularity of the phoney research scam

Don't fall for the Microsoft Windows scam

It's too late to beat the carbon credit scam

HMRC crackdown on UK-based pension liberation scams

Timber investment: scammers that promise to make money grow on trees!