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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