Six Steps To Choosing The Right Currency Broker

Six Steps To Choosing The Right Currency BrokerAnyone switching Sterling overseas has a choice of several services, including banks, money transfer services and specialist brokers.

Many advertise no commission and cheap rates, so comparing features is not always easy – and the cheapest is not always the best.

So to help choose the right foreign currency exchange deal, consider these six key points:

Is the broker regulated?

Any British foreign exchange service must have authorisation by the Financial Conduct Authority (FCA) as a payment institution. This authorisation means the broker follows a code of conduct and separates customer money in a special account. This safeguards any money held for clients should the company face financial difficulties.

An authorised company will have a reference number that can be checked by phoning the FCA or looking the company up on the FCA web site (www.fca.gov.uk)

Beware – some companies say they are authorised and offer a registration number that does not check out.

Is the broker financially stable?

The six answers you are looking for are:

  1. How long has the company traded?
  2. Does the firm make a profit?
  3. Does the firm have cash reserves?
  4. Does the firm have big debts?
  5. What’s the firm’s credit rating?
  6. What is their business reputation like?

Check the first four answers out on the Companies House website (www.companieshouse.gov.uk).

Dun and Bradstreet are one of the leading credit rating agencies for businesses (www.dnb.co.uk)

A general web search for the company name should throw up any news stories or information about gripes from customers.

Does the broker offer the service you need?

Not all foreign exchange currency brokers offer the same services, so shop around to find the one that suits you best. Look at their web sites to see if they provide regular currency exchange updates and tools for checking out exchange rates and fees.

Don’t really on a swish web image

Branding and carefully selected images can enhance a currency firm’s image online and make them look like something they are not.

Are brokers on commission

Anyone making you a commission-based sale has the temptation to embellish what they tell customers so they earn more money. Go for a broker that offers the right service and not one that might flatter to deceive in a cut-throat market.

Who offers the best deal?

This depends on the currency exchange service you want. For a one-off transfer, banks, money transfer services and brokers all offer similar services.

The main differences between them are fees, exchange limits and exchange rates, so compare them on these factors.

For regular transfers, specialist brokers will generally offer a fixed exchange rate and regular monthly transfers.

About John Cassidy

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