This piece first appeared in the money section of the Saga website on 13 October 2010
The text here may not be identical to the published text

 

AVOID CURRENCY RISK

 

When Crown Currency Exchange collapsed at the end of September, 13,000 people were owed £20 million of euros and dollars. They will never get their foreign currency. And will be lucky if they see 10p in the pound of the money they have lost. So how can you get your foreign cash safely?

 

The only really safe way is to research the deals at High Street bureaux de change; find the best rate at a reasonable distance to travel; get the cash from a machine inside a bank close to the bureau; and buy your currency directly.

 

However, ordering online is very easy and convenient and may be cheaper than the High Street. So if you decide to do it, take these four steps before entrusting any online company with your money.

 

·         Step 1: Check out the best deals online. Make a note of the firms with the top five offers making sure you take account of postage or delivery charges.

·         Step 2: Go to the website of the Financial Services Authority www.fsa.gov.uk. On the front page click on ‘Register home page’. That will take you to a page called ‘Welcome to the FSA Register’. Click the tab marked ‘Payment Services Firm Search’.

·         Step 3: On this page enter the name of the company – it has to be the formal company name which you will find somewhere on its website. Press return. If you get a list of firms then click on the one you want. That will bring up the firm’s record card. In the fourth column headed ‘PI Status’ it will say one of two things.

o   ‘Small Payment Institution’. That means its turnover is less than €3 million a month. The FSA does no checks on how it conducts its business. If the firm collapses your money will not be safe. Some of these firms may tell you they are ‘registered with the FSA’. That gives you no protection at all.

o   ‘Authorised Payment Institution’. The FSA has checked that the firm keeps customer money in a separate bank account and has adequate capital to run its business. If the company collapses your money should be safe. But if it turns out not to be then there is still no compensation.

·         Step 4: Go back to your top five. Consider them in the light of whether they are ‘small’ or ‘authorised’. To be cautious, consider the offers of the Authorised Payment Institutions. And to be ultra cautious pick the one which offers the second best rate.

 

Enjoy your holiday!

  


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