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Expat Investor : July August 2008
PROPERTY INVESTMENT July/August 2008 ? EXPAT INVESTOR 23 Can Brits ever trust High Street banks with their money again? Even as they fight high court action over excessive and unfair overdraft charges, High Street banks seem to offer some of the worst rates and advice to customers exchanging foreign currency. Buyers of property abroad are generally the worst affected. People are losing out on thousands of pounds by using a bank rather than a specialist foreign currency broker. Chartered Surveyor Geoff Bates, 54, from Amersham, Bucks has vowed never to use his High Street bank to buy foreign currency again. Despite holding an account for over 25 years he was given a rate that could have cost him £24,000 more than using a currency broker like FC Exchange and the entire process was made more painful and taxing that it ever should have been. We’ve noticed a sharp rise in customers reporting the exorbitant exchange rates that they are being offered by large High Street banks, which add a substantial amount onto the cost of buying abroad. Most people assume their banks are trustworthy and safe. They often use them to exchange currency without thinking of comparing their rates with anyone else’s. In some cases they are paying up to 4% more for their currency by using a High Street bank. This doesn’t sound a lot, but when you are exchanging a large amount of sterling, for instance to buy property abroad, it could easily mean an extra £10,000 profit for the banks that would otherwise be in your bank account. When you use a bank to exchange currency you are not dealing with an institution which solely specialises in currency exchange. You will almost always end up paying far more than you would through a broker. FC Exchange alone has saved customers over £12million since 2005 purely from the difference Fast Facts 66450 between the exchange rates they offer and those offered by banks. A wide variety of products offered by the company can save people even more. These products can freeze exchange rates for up to two years as well as monitor the exchange rate to make sure you buy before rates fall below a certain level. Most people prefer to know the final price they will be paying for a property rather than guess whether currency markets will move up or down. FC Exchange can guarantee exchange rates for up to two years. Banks do not generally offer this service, which means people changing currency through a bank to buy property abroad are gambling on how much they will eventually pay. Top 10 tips for currency exchange: ? Currency markets can rise and fall – the final price you agree for a property abroad could fall, but also increase by many thousands of pounds and differ from the original price ? Go to a currency broker early – they can suggest different products and services that can save you money and take the risk out of buying abroad ? Don’t expect your bank to give you the best deal – they are not currency exchange specialists and may charge you thousands of pounds for the service ? Take independent advice on your bank’s recommendations before transferring money – it is always better to get a second opinion ? Conduct your own research into currency markets – some background knowledge of the way currency markets move will give you an advantage ? Ensure the company you are dealing with has full audited accounts at Companies House – companies that appear professional are not always what they seem ? Only deal with an established City firm with a city address – don’t deal with someone operating out of a warehouse on an industrial estate or a PO Box. Also smaller out of town outfits are unlikely to have the clout to achieve the best prices ? Ensure your funds are held separately from other company assets in an account specifically designated for client transactions ? Confirm that the currency brokerage is registered with HM Customs – those that are not registered are not operating legally ? Ask about transfer charges and any fees or commissions – any brokerage worth its salt will even transfer volumes of £10,000+ for free. Can you trust your bank on foreign currency exchange? Nicholas Fullerton, Managing Director of FC Exchange, one of the UK’s leading independent currency brokers, offers his views and insight into buying foreign currency. “We’ve noticed a sharp rise in customers reporting the exorbitant exchange rates that they are being offered by large High Street banks, which add a substantial amount onto the cost of buying abroad. ” “Most people prefer to know the final price they will be paying for a property rather than guess whether currency markets will move up or down. ” “Only deal with an established City firm with a city address – don’t deal with someone operating out of a warehouse on an industrial estate or a PO Box. Also smaller out of town outfits are unlikely to have the clout to achieve the best prices.”
May June 2008