Page 10 - Expat Living Winter 2017

l Smaller amounts – FX brokers are not generally best
for sending smaller amounts of money.
l Not as safe – the Financial Services Compensation
Scheme does not cover these firms if they go bust.
You can choose to send money abroad using the
current exchange rate. However, if you’re worried about
exchange rate changes for a future amount you’re
planning to send, consider a ‘forward contract’ to lock in
the exchange rate for a future trade.
Forwards are useful if you know you’ll need a large sum
of cash at some point in the future.
For example, if you know you’ll need to cover the down
payment on a holiday home in Spain but are worried
about the pound weakening or the euro strengthening
before it’s time to send the money, this method will let
you lock in a rate.
Safety
Always check whether your money transfer firm is
authorised or registered by the FCA. All UK-based
firms handling overseas money transfers must be either
‘authorised’ or ‘registered’ by the FCA.
While authorisation means there are certain safeguards
on your money, you still won’t be covered by the
Financial Services Compensation Scheme (FSCS).
So if the firm you’re using fails and can’t pay back
all the money it owes you, you won’t be able to get
compensation through the scheme.
Firms authorised by the FCA need to safeguard your
money by keeping it separate from company funds. So if
the firm goes bust, you are more likely to get your money
back. All larger firms must be authorised.
Smaller firms can choose to be registered rather than
authorised. Registration is a much weaker level of
10 EXPATLIVING
protection, since the firm just needs to show the FCA
that it’s based in the UK and that none of its managers
have been convicted of financial crimes. Registered
firms might choose to safeguard your money, but they
don’t have to do so by law.
Authorised and registered firms both have to follow the
FCA’s rules about how they deal with customers, for
example having a complaints procedure.
The FCA keeps a list of all authorised and registered
firms at www.fca.org.uk. If a firm isn’t on the register it’s
not necessarily bad news. It might be because the firm is
based in another country instead of the UK.
Check the firm’s paperwork – it should give the details
of which country has authorised the firm. If a firm isn’t
registered with the FCA – or another EU regulator – you
should avoid it, as it might be operating illegally.
A safe and legal money transfer firm or broker should
give you plenty of information – in writing – before and
after you make a payment.
You should get documents telling you:
l What exchange rate will be used.
l What charges and fees to expect.
l A reference number for completed transfers.
l How the person you’re sending money to can collect it.
l Confirmation of the transaction details, including the
final cost and exchange rate and how long it will take
for the money to be transferred.
If a firm loses your money – or you have another
complaint – the first step is to get in touch with them
and give them the chance to make things right. If
they can’t sort your problem out, you can bring your
complaint to the Financial Ombudsman Service.
They’ll investigate and if they find the firm has been
unfair, the Ombudsman has the power to order them to
repay you the money you have lost.