Currencyuk Condemns Cowboy Exchange Operators
Monday, 28 February 2011
"Beware of foreign exchange operators gambling with your cash", is the warning from leading foreign exchange brokers, CurrencyUK following the arrests of Peter Benstead and his family who were involved in the online foreign exchange organisation, Crown Currency Exchange.
Last year around 8,000 customers were owed a total of £16m* following the collapse of the online currency converters, which offered unbeatable deals by obtaining the money from its clients more than three months in advance of exchanging the transaction.
Although Crown Currency was FSA registered it was not regulated. By only making deals of up to £10,000 there was no necessity to make this distinction which is more prevalent among dependable companies.
However, on Tuesday 22nd February the company's founder and five members of his family were arrested by Devon and Cornwall Police under suspicion of money laundering and fraud offences, potentially damaging the reputation of the foreign exchange industry and customer confidence.
Adrian Jacob of FSA regulated CurrencyUK commented: "The last thing you expect when you visit a supposedly respectable website offering financial services is cowboy operators and risky speculation on your money.
"I can reassure customers that fortunately this type of behaviour is not industry practice. However, it is essential that customers use FSA regulated currency exchange companies and if the rate looks too good to be true, it probably is."
Adrian provides his top tips below for ensuring a safe exchange transaction of a company or individual's money:
- Check that the organisation is regulated by the FSA - FSA regulation ensures that all financial operators comply with guidelines put in place to avoid high risk ventures. Companies who are only registered with the FSA are not regulated.
- Enquire how the dealer will make their money i.e. commission, exchange rate for example - If the dealer is holding money in advance of a sale, they are employing a high risk strategy expecting the market to fluctuate beneficially to them. The problem with this is that the market is volatile and as the case of Crown Currency Exchange has shown, when FX rates do not react in the manner that's anticipated everybody loses out.
- Compare the Foreign Exchange market - FSA regulated currency exchange companies usually offer better rates than the banks, particularly for small to medium sized enterprises and individuals. By comparing the market you will get the best deals available as well as some financial tools that will help you protect your cash flow.
- Find out how long it will take to deliver your exchanged currency - The total transaction shouldn't take longer than a few days and if a rate cannot be offered within that time frame, question why. You should not have to hand over your money more than a couple of days in advance of the transaction.
For market updates and the latest FX news follow Currency UK on Twitter: @CurrencyUKLtd
Notes to Editors
Regulated by the FSA, Currency UK is one of the UK's leading foreign exchange brokers, ensuring individuals and companies can access the best rate for currency transfers across FX markets.
A major participant on the foreign exchange market, Currency UK regularly offers the most competitive rate on currency exchange and has moved millions of pounds around the globe for its clients.
Currency UK is a member of the Association of International Property Professionals (AIPP) and is the preferred foreign exchange partner of the Offshore Financial Trade Association (0FTA).