Choosing a Secure environment for transferring your money

Choosing a Secure environment for transferring your money

  - Whatever your reason for transferring money overseas, sending money to your family, paying for an overseas property or transferring a pension it is important to consider how safe your money will be.
 


Whatever your reason for transferring money overseas – sending money to your family, paying for an overseas property or transferring a pension – it is important to consider how safe your money will be,

When you are looking to transfer funds overseas, you need to trust the company handling your money. Currency exchange businesses, unlike banks, are not covered by the Financial Services Compensation Scheme (FSCS), so if something goes wrong, you won't be guaranteed full compensation.

The collapse of Crown Currency Exchange in October 2010 left an estimated 13,000 clients out of pocket. Crown Currency Exchange was registered with – rather than authorised by – the Financial Services Authority (now the Financial Conduct Authority), a crucial difference that left Crown customers exposed.

When choosing an international money transfer specialist, it is vital to look for one authorised by the FCA (formerly the FSA). Authorised payment institutions have to keep your money separate from the company’s own money. This means that your money will be protected and should be paid back to you if the business goes under. Bear in mind that companies whose turnover does not exceed €3m a month can be registered with the FSA instead of authorised by them, and as such are not obliged to ringfence your funds. You can check whether a business is registered or authorised on the FCA’s website.

It is also worth checking what anti-fraud measures a money transfer company uses, for example identity checks and technology to protect money transferred online. Industry standards include the payment card industry data security standard (PCI DSS), a set of 12 requirements designed to secure and protect customer payment data.

After handing over your money, you should receive a reference number or code for the payment and confirmation of the cost, the exchange rate and how long the payment will take to get there.

If you have a complaint about the service, contact the company first to give it a chance to resolve the problem. It should respond to your complaint within eight weeks, or give reasons why it can not give a final response.

If you are dissatisfied with its response you can complain to the Financial Ombudsman Service,  the official independent service for settling complaints between consumers and businesses providing financial services. If the ombudsman decides that a business has acted wrongly – and the consumer has lost out as a result – it can order the business to put things right.

There is no compensation scheme for currency transactions that go wrong – although you can complain to the ombudsman about an authorised firm.

How to choose a currency specialist

It’s important that you undertake the following checks when choosing a currency specialist:

• How long have they been in business?

• Are they authorised by the Financial Conduct Authority (formerly the FSA) under the Payment Services Regulations 2009? Companies that are authorised by the FCA have had to meet strict capital adequacy and business practice rules, comply with Payment Services Regulations and the FCA’s Conduct of Business requirements.

• Are they registered with HM Customs as an overseas money service business?

• Do they hold your money in segregated client trust accounts? (your funds are held separately from company funds protecting it from creditors).

• Do they have audited accounts on their website and how strong is the company’s balance sheet?

• Do they have professional indemnity insurance protecting customers from staff fraud etc.

• How many staff do they have and what turnover? (Obviously a large established company is more reliable than two guys in a back room, though it’s no guarantee).

• Do they have direct access to SWIFT? SWIFT is the world’s largest payments and settlements network for domestic and international trades. Direct access ensures you, the client, benefit from faster payments and enhanced security.

Glossary

When transferring your money there are various options to choose from, including spot contracts, forward contracts and market orders. The option you chose will depend on factors including how quickly you want the money transferred and whether you want protection against fluctuations in the exchange rate.

Spot contracts
A “buy now, pay now” option. This is probably the best option if you need to transfer money quickly at the best exchange rate. Once you agree a rate with your chosen currency specialist, your currency can be transferred as soon as you have paid for the contract.

Forward contracts
A “buy now, pay later” option. This enables you to agree a price now for foreign currency to use in the future. A forward contract allows you to buy foreign currency based on current market rates, for a delivery at a predetermined date, which can be up to one year ahead. Should the exchange rate worsen you will not be affected. However, it is important to remember that if the exchange rate improves, you will still be obliged to complete your contract.

Options
You can also use an option. As the name suggests, this gives you the option but not the obligation to buy currency at the spot price any time up until a future date. Foreign exchange companies – who alter their exchange rates in line with currency movements throughout the day – can help you time your trade to make the most of your money. Bear in mind, though, that currency rates can go down as well as up.

Market or firm order
If you are looking to achieve a specific rate, you can arrange a market order, which allows you to specify a specific rate of exchange for your currency transaction. When the currency market reaches the level you want to trade at your currency can be bought or sold automatically. You can cancel your order at any time.

See how much you could save.  Sign up and make a transfer.

Smaller transfers: rate comparison (example below)

International Money Transfers Based on £10,000 into Euros

Every month we check all main high street bank and building society exchange rates to make sure HiFX's overall price (including banking charges, exchange rates and other fees) is better.

The exchange rates below were obtained by independent research company DQM Group. Based on sending£ 10,000 into Euros. Results have been ranked by amount received (after fees, where applicable).


 
 


 
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