The following article was written by Robin Haynes, he is the Managing Director of Currency Index located at Rickmansworth, Hertfordshire. You can know more about him and their work by adding him in one of your circles on Google+.
Whether you are sending money to a loved one who is living overseas or whether you are buying a second home abroad, the services of a currency broker will be simply invaluable.
There are many advantages of using a currency broker over a high street bank such as better exchange rates, lower charges and more expertise.
Most important of all
Although you might be tempted by the broker offering the best rates, you shouldn’t even consider using one who is not an Authorized Payment Institution (API) with the Financial Conduct Authority (previously known as the Financial Services Authority).
An API is an elite status which means the company has been vetted in great detail with every aspect of their staff and procedures intensively audited. They will also be subject to on-going checks and must hold a certain level of reserve capital to remain an API.
An API is not the same as simply being registered with the regulator; smaller companies can opt to have fewer checks carried out but they will not qualify to call themselves an API. However, they can say they are registered with the FCA and legitimately claim to be a payment institution. You should always therefore use a proper API as this will provide far better security for your money.
Beware companies who don’t ask who you are
Sending money overseas is a highly regulated activity because of the possibility that it may be used for money laundering and other criminal purposes. For this reason, currency brokers should ask to verify your identity before agreeing to proceed with your request.
This isn’t necessary every time you use them if you have provided proof of identity before. However, when you set up your account you should be asked for documentation such as a driving license, utility bill or passport.
Whilst it might be very tempting to opt for a company which is more relaxed, this is an indication that they don’t take security seriously. If they are willing to waive those requirements you should ask yourself what else are they not bothering to do?
Check out the reviews
One of the biggest assets a currency broker will have is its staff. Although they will undoubtedly be cheaper in price than the high street, the majority of currency brokers will be offering similar exchange rates and charges.
Therefore, the main thing that differentiates the right broker for you from their peers could be their degree of knowledge and the customer service they provide.
Of course, every company that deals directly with customers is bound to say that they provide great customer service and has knowledgeable and helpful staff. One of the best ways to see if they are telling the truth is to check out some of the reviews from past customers.
Every company may well post glowing testimonials on their site but by simply carrying out a Google search you will be able to see whether the firm has been reviewed elsewhere. A company which has lots of positive reviews (which look genuine!) is infinitely preferable to one which has no customer reviews online.
Currency brokers tend to operate online rather than having a physical branch, a fact which can make some people feel a bit uneasy. Because of the lack of a high street presence, you therefore will want the reassurance of knowing that you can reach your broker quickly and easily without having to wait for hours on hold in a queue.
One of the biggest bonuses about using a currency broker is that you can carry out transactions at a time that suits you rather than being dictated to by the opening hours of your local bank. A currency broker that offers customer support around the clock is therefore a distinct advantage to look out for.
There are many different companies offering currency broker services and it can be difficult to separate the wheat from the chaff. However by following the above steps you should find it much easier to find the broker who is right for you.
Photo courtesy of epsos.de