Short of some elaborate fraud (and there are some I shall describe that are just plain crafty), it is rather difficult to simply ‘lose’ your money when dealing with a foreign currency company. Having said that, one shouldn’t be nonchalant. Any FX firm you inquire with will do their due diligence on you. Why not do you due diligence on them? We appreciate that you may consider life too short and you may very well have had a concrete recommendation to use our firm, bully for you, but, you should at the very least avail yourself of an understanding of the risks facing an FX firm so that, if the world should turn on it’s head and your firm isn’t around anymore, you can say you were aware of this risk rather than having to admit that you did nothing to question or assert their probity. Every money service business in the UK is regulated by the FCA. They must also have a license from HMRC and you can look for them on the FCA register. By money service business (MSB) we mean companies who actually physically receive money from their clients into their own segregated accounts. It is worth noting that brokers like Prime Cap are not MSBs; we appoint an FCA regulated business to receive and hold client funds for us. This gives us greater flexibility but also means that our clients have the benefit of the security that a far bigger player in the non-bank currency sector can provide. We do our research and vet the institutions we use. We prioritise a secure balance sheet, UK mainland accounts and a global payments infrastructure. Using a regulated third party gives us access to a global financial network and means we can reduce our costs, which feeds directly into improved margins for our clients. Perhaps not surprisingly, money service businesses (MSBs) are the common focus for those wishing to launder money, but rather less those looking to defraud customers of it. This is because of the rigorous reporting and customer due diligence protection in place. There are a huge variety of money service businesses. These can range from bureau de change companies with a high street presence into which you can walk and electronically send money home, right up to the enormous FX brands who support and execute trading for the likes of the Post Office and the Telegraph (who offer a branded currency service), but use an MSB for their back office functions. Frustratingly for the industry itself little distinction is made between a smaller entity and a larger one and some of the regulated institutions relied upon to service, bank-roll and support the retail deliverable FX industry treat the sector as a whole rather than acknowledging there are a large number of compliant and diligent businesses. Whilst regulation of the FX sector may ensure that companies have particular practices with regards to the segregation and protection of client money and comply with customer due diligence (CDD) guidelines as a means for detecting and protecting against being used to launder funds and other elicit activities, there is little that the regulator can do to enforce operating practices on a business necessarily - spot checks, yes; but, making sure the company does right by their client...not so much. It is reasonable to infer that, provided a customer meets the regulatory requirements, they can become a client of an FX firm. Whether or not that client has the scruples one would like to think they do is for the FX firm to work out. By this we mean, as with our posts about what to do if you need to cancel a currency contract, if as a broker one feels that one’s customer might have an issue in paying for a contract, doesn’t understand what is expected of them and/or cannot be relied upon to meet the terms and the conditions of a contract, then the broker has to act. The regulator is not going to be there as the filter for the business. The best protection for the business and its other clients is competent, vigilant and diligent staff who are motivated to protect the integrity of their portfolio and the operation of the business. As an example, we were recently engaged by an interior design studio to make a payment to one of their suppliers. Like many interiors firms (and, dare I say it, their businesses make up the bulk of our corporate portfolio) this client relies on the ‘go-ahead’ from their customer before placing an order. We quoted the client (the interior designer) and they accepted our price…however, we had not made it clear enough that when we get 'the go ahead' we actually physically buy the currency they request through our underlying FX provider. The design firm hadn’t take this into account. They thought they were saying ‘OK, I like that rate’. It was only when they checked with their client and it was decided they did not want to buy the piece that it became clear to us of the miscommunication. An extrapolation of the above example might lead one to ask…’well, what happens if every client of a foreign exchange firm decided they didn’t want to pay?’. This is the question and, frankly, the single greatest risk to the continued operation of the FX firm. If we sell ‘x’ amount of currency and someone does not pay for it, we are on the hook to meet the difference between what we have sold and what we have bought. In theory no firm should struggle to do this because they have put away sufficient allowance to cover any such loss - and, in instances like this Prime Cap are not at risk because of the liquidity of the provider with which we work. On a slightly tangential but no less relevant note, hackers are coming up with more elaborate ways of getting to your funds - not through the institutions that hold them, but through your own personal password protected platforms. Fortunately firms are responding by tightening their verification practices. Have you heard about the spread betting company that received an email from a client asking the company to transmit the customer’s entire balance (funds on account) to a new beneficiary? So convincing was the email received that the employee who received it could not identify the fact that it was fraudulent. The money was sent, following receipt of this instruction, to a bank account in central Africa. Funds were withdrawn and the account closed. This fraud required sufficient confidence on the part of the fraudster. They needed to be confident they could mimic the dialogue of the victim. As it happened the regulator found that it was actually incumbent upon the stock broking firm receiving the request to verify from whom the email instruction was sent. The spread betting firm had said the liability for this rested with the client because they should have done more to secure their email account, but, this was not given much credence by the regulator because it was felt that proper or enhanced checks should have been in place to identify the person giving the instruction. All businesses have tightened up. Prime Cap and our FX and payment services counter-parties have taken steps to ensure that any new beneficiary account details added to a client’s online trading facility with us must be verbally authorised and confirmed by/with the client before a payment can be sent. We would ask you to bear in mind that it is one thing for someone to ask us to buy an amount of currency, but, unless payment for that amount comes to us there is nothing for us to send on. We cannot really be exploited in that way because our model relies solely on cleared funds. Sometimes our clients do elect to hold funds on account with our provider and it is these funds that can be the prey of the unscrupulous, but, the safe guards and our stringent ‘know your client’ protocols ensure that every care is taken to authenticate instructions to send money onward. Plus, we electronically check and verify every account we send a payment to. We will not release a payment to an account we do not trust or recognise and we work with our client and partners to make sure we are satisfied as to whom we are sending funds and from whom we have taken a payment instruction. The way that Prime Cap is structured does in fact provide our customers with an added layer of protection. If you were sending money to some companies you would simply deposit funds into their named 'client trust account'. The payments team of the firm would then allocate funds according to the booking made by the client or the instruction of the client if they would rather hold money on account. Prime Cap uses the segregated currency accounts of an authorised payments institution. We can effect the same actions when your funds come in, but added to our own protocols are the security features of the API we work with. So, the companies you're dealing with are scrutinised at every step of the transaction. Our brokers provide 'eyes-on' tracking for you, but anyone looking to cause trouble must deal with the full force of not only our cyber protection systems, but those of our APIs and their bankers too. If you would like a little more information about our structure, when it is nearly unique and how it helps us remain one of the freshest operator for private clients in the London market, then do visit our website www.primecappayments.com or call us on 02031728193. #secure #authorised #FCA #API #bank #institution #fundsd #currency #transfer #secutiry #online #trading #Ebury #EburyPartners #WorldFirst #Amex #AFEX #internationalmoneytransfer #moneyexchange

At Prime Cap we talk a lot about the work we receive from the legal sector. We're very good at establishing relationships with conveyancers and we like to think this is because of our teams engaging personalities, but it is most certainly because of the direct return we provide their clients. It was, therefore, intensely gratifying for our Americas team to be referred to a lawyer for their personal dealings. The ante is always upped when one is dealing with those who already operate in fields we consider ourselves credible in, largely because, as was the case here, the referral was actually coming from a law firm we work with. Hence - Law firm refers a client who is a lawyer...doubly challenging you might think? Our close affiliate - a City based law firm - suggested that one of their clients contact us about converting some US dollars into pounds sterling for a property he was purchasing in London. The client in question, the one referred, is stationed at his firm’s London office but firmly considers himself an American. His firm also does too, so much so that he is actually paid in US dollars despite living and working in the UK - this is not uncommon. Initially, and in anticipation of exchange of contracts, he needs to convert some dollars for the 10% deposit. In due course he will need to convert the balance amount at the point of completion. The law firm that referred are doing the conveyancing for this client. It is of benefit to the client that we can, on his instruction, pay the sterling he buys directly to his solicitor, thus speeding up the process for all concerned. Our client already banks with a notable global banking institution with a trans-Atlantic offering. We were informed that this bank is somewhat slow to react and simply isn't proactive enough in counselling the client on the best way to facilitate the conversion and transmission of funds. Added to which it is more than likely that, although better than a UK bank, the rate of exchange may well be inferior to that which we can offer. From experience we surmised the client could shave (or rather save) at least 0.5% off the rate offered by his bank. In this instance that could equate to as much as $5000 if not more. Our size is a distinct advantage for my client in this instance. Our overheads being what they are (near zero) and the fact that he is dealing with an individual on our dealing team who can assess and augment their rate to out perform the competition subjectively, means we have the edge on a bank who, although able to play on their reputation, perhaps don’t place emphasis on the ‘winning the transaction at all costs’ like we do. Without knowing it, our client will benefit from the fact that we want to show off to the lawyer who referred them. It would be far better to make less profit on 10 clients than it would to underestimate the competition on just one. Collectively, ten clients will earn us more than just the one and they might all serve to beget us more clients over the longer term by virtue of the good turn we did them on the rate. It is this which underpins Prime Cap's growth strategy in fact. It took us less than 24 hours to collect all the AML (Anti-money laundering) documentation and to confirm to our satisfaction and that of our compliance team that we are dealing with a bona-fide individual. This turn around is, by any firms standards, quick and reflective of just how rapidly we can respond to the needs of our customers. In addition to the obvious higher volume transaction, that being the subject of the referral and this post, the fact that this client is paid in US dollars presents another point of engagement. It may also be the case that his colleagues are in the same boat. Whether by hedging for 12 months or less, or simply by converting pro rata on a month by month basis, We are confident that this client will become a regular trader with us…which may inform a post later in the year. #law #FX #US #USDollar #currency #exchange #property #London #PrimeCap #International #payments #conveyancing

Unsure why, other than surmising that people don’t really understand the breadth of work the deliverable FX sector is capable of handling, one of the most common assumptions made is that firms like Prime Cap only deal with 'sizeable' currency conversions. Not so! It is certainly true to say that the benefits of the improved spread/rate we offer are more clearly evident on big(ger) conversions because 3% of £100,000 is numerically greater than 3% of £1000, but, that does not mean that a company, ours in particular, will arbitrarily turn away smaller payments just because of the amount. In fact, you’d be accurate in thinking that the business with 100 clients doing small amounts regularly is more stable than the firm who has just the one client doing a bigger sum once. Diversification is key to a good currency dealer being able to consistently deliver a competitive margin to all their clients. With this in mind there are a couple of ways you can approach making smaller regular payments and there is just no reason why you should be put off of using a cheaper specialist just because of erroneous assumption… 1. LOWER TRANSFER FEES - In the same way that an FX firm can pass on the benefit of it’s wholesale buying power when it comes to the actual rate of exchange, so too can it pass on the benefit of economies of scale when it comes to the processing and associated costs of sending money abroad. The two costly aspects of sending a payment are the cost of wiring it and the margin within the rate of exchange and your bank will always charge you more for using their platform. It might cost you £16 to send a payment to Spain using your UK high Street bank. At the same time, because they do many many more payments than you a day, week or month, it might only cost an FX business £5 (or less). Hence, the FX firm can undercut your bank on the associated costs. In fact, this is precisely what companies like TransferWise sell themselves on. Their ads state 80% saving vs. your bank. This is because they charge you £3 rather than £30. It is clever and it means you get a saving, but, as the savvy among you will have noticed, it does not tell you anything a bout their rate of exchange per say. Also, although it doesn't matter because a saving is a saving, they're not 'giving' you a payment cheaper; they're actually just sending it in a different way. It is a very clever strategy and it took them a while before they attracted enough clients to reach critical mass in terms of asking a profit, but, ask yourself...are you really going to send £250,000 over an app? 2. A BETTER RATE OF EXCHANGE - Foreign currency companies have smaller margins for a number of reasons and are able to negotiate their costs from the whole of market. This means that either by locking in a rate (which we will come to) or by transacting each month, you will pay an average of about 2% less vs. your bank on a foreign exchange conversion simply because they will take less off the top of the euro they're selling you. One of the particularly appealing things about a non-bank company is that you can actually call them up each month to compare their rate against anyone else. Doing this sort of thing manually gives you the option to suspend a payment if the rate is particularly poor, or increase the amount you send when rates are good. Either way, you'll be talking to someone who knows what you're trying to achieve than a call centre operative who rarely gets questions about currency let alone have any control at all over what rate you might receive were you to opt to use them. As touched on above, you will definitely be paying less to send the funds internationally, so, all in all the whole process should be more cost effective by the rate and the payment cost and dealt with more efficiently because all staff at FX firms like Prime Cap know what they are doing when it comes to sending payments…you wont need to be on hold to get through to the correct department if you have a question or want to change an aspect of your payment. At Prime Cap we enable you to do all this online (if you want to), a bit like online banking, but, you have a direct and dedicated telephone link to your dealer who a) can see what you see and b) can anticipate precisely what you may need help with, then and there. 3. AUTOMATE THE PROCESS - Some companies offer what is called a ‘regular monthly transfer service’. Generally this is a direct debit service that allows you to determine how many pounds are debited for conversion or how many/much of the foreign currency you want to buy each month. We think these ‘plans’ do not offer the level of competition you deserve; in addition to which it is sometimes difficult to compare the rates used, because, under the direct debit clearing conditions you may not know precisely when your money was converted - is it on the day they debit your account, or is it on the day they credit the broker? It is not particularly transparent, but, it is very convenient. The best of both worlds comes if you select a standing order payment for your monthly mortgage amount. You are the one who controls this in a far more direct way than with a direct debit. Using the standing order method means that you broker converts funds when they receive them…not necessarily when they are doing all the other payments for that month. This means you will get a real time update as to the rate you got and as to when funds will arrive ‘at the other end’. This way is generally more competitive for you and still allows you to plan for unexpected moves in the market. What this way does not do is debit you to the tune of a certain foreign currency amount, but there are simple ways to accommodate for this. Undertaking a simple analytical exercise with Prime Cap's dealing team will enable you to offset any rate movements and equip you to manage your monthly transmissions more transparently. Anecdotally, having worked at on the very first non-bank FX firms to offer a structured 'Regular monthly transfer', we can attest to the fact that the rate of exchange should be far far more competitive on those products than they are. The company has some 10k clients. Let's say 20% of them send £1000 per month for the overseas mortgage and using their regular transfer service. So, the company is therefore converting £2,000,000 each month. Typically the firm in question would apply a rate with a 3% 'mark up' on it. They did so because they knew they banking competitors did not offer such a convenient service and so they had little commercial incentive to improve their rate. We don't think it fair, even in the face of the costs to send a payment, a business should make a revenue of £60k when all they're really doing is performing a debiting exercise on a set day each month. Maybe that's just us. 4. FIX A LONGER TERM RATE If we were to agree that the average payment towards a foreign currency mortgage is in the region of €1200 then, over the course of a year, someone might need to buy €14,400, let's say. Do you think that when exchange rates are good someone would be inclined to lock in that rate for a longer period? It not only allows them to forecast and know their expenses, but, it may begin to constitute a saving if the rate were to depreciate? In the same way that a business can buy the currency it needs to settle an invoice prior to the date on which the settlement is due, an individual can buy however much currency they need/want and simply pay for it further down the line or on a month by month basis. The average rate of exchange from sterling to euro for 2016 was 1.28. This means the average cost of someone’s €1200 mortgage was £937.50. If one had locked in a 12 month rate in February of 2016 when the rate was 1.40 they would have saved themselves £919.29 for the year – nearly a month's mortgage payment. When I see people chasing reductions of £150 on their utilities or moving bank accounts for £50 I find myself frustrated that more people do not mend the roof when the currency sun is high. Yes, the caveat to using a forward contract for your monthly payments is that you may have to lodge 10% with the company you take out the contract with. In theory, therefore, what your saving on the rate of exchange simply remains with the firm until the 12 months is up. That is the way to look at it… So, to conclude, FX firms can reduce the fees you pay when you send your monthly payment. They can also ensure that you are paying fewer pounds for that same fixed foreign currency amount. You can sit back and allow Prime Cap to take care of the payment and, if so inclined, you can cement your monthly payment for a year. Bear in mind that these types of tools and tricks don’t just relate to mortgage payments. They come in to their own with any smaller regular payment whether you are a business or private client. #sterling #europe #france #PrimeCap #foreign #international #directdebit #payment #broker #FX #euro

A private client from Germany (living in London) introduced to me by his London based solicitor once again justified our belief in the strength of a personal referral and the value of having an actual person at the end of the phone (in this case...us) when buying or selling property with more than one currency involved. Often it is incredibly hard to persuade individuals not to pin all their hopes on an improvement in a rate of exchange. One spends a fair bit of time trying to articulate just how uncertain rates of exchange are and that inaction and a 'wait and see' mentality is tantamount to throwing your money in the air and hoping it lands back in your hand. Our client is a young chap, which may be decisive (as he didn't think he knew it all already). He is buying a house in London for £4,202,730 - the currency he was buying was likely part of a deposit...which is not uncommon in recent years. Day by day, minute by minute in fact, the euro cost of this property is changing. Whilst we impress and emphasise to him the fact that the euro cost could well go up, in deference to the value of a balanced perspective, the volatility we're seeing at the moment (c. 05/09/2016) on the exchange rate between sterling and euro means that the euro cost could just as easily be going down for this client. The main reason for a post focusing on this particular transaction is because, aware of the futility of trying to predict the rates, the client confidently and politely asked that we might buy the GBP he needed now, rather than nearer his completion date. He had already taken the sensible step of instructing his German bank to electronically send us €5,050,00, a figure which, at the time, was less than what was needed to buy the £4.2mil he required for the purchase because the rate had effectively moved against him since he undertook his initial estimate - but he was looking at the bigger picture. In our view it is far more important to make sure one secures the rate for the bulk of one's commitment; one can worry about the pounds and pence later. The level of trust placed in us by this client is testament to what a strong personal recommendation from a 'professional services' business like a solicitor can do for the FX sales process, for the client's pocket and for the satisfaction we get from our work. We do believe that this client, savvy and 'sophisticated' as he appeared to be, would not have felt confident about using just any old FX firm were it not for the introduced by his conveyancing solicitor; and, for the most part, this is because 'FX firms' like those common across the UK tend not to exist abroad. That is a hugely sweeping and perhaps unfair observation, but, we constantly get told by London based estate and search agents that they are not asked about FX...and our firm belief is that this is because their customers, discerning though they may be, are not aware that this specialist financial service is available to them. Hence, frankly, the topic does not come up. A specialist acquisitions agent working for a family office keen to grow their prime central portfolio is unlikely to feel too comfortable suggesting an FX broker if the subject of foreign exchange and any international payment isn't brought up by the buyer. Many/most investors have GBP bank accounts too, so may transact 'in house', however, the improvement offered on spread is truly compelling which is why Prime Cap is ever optimistic about successfully securing a new referral relationship should we encounter a sympathetic ear. To add to the superior rate of exchange (by recollection we undercut ABN Amro quite comfortably by 1.7%) we were able to pay the funds bought by our client directly to their solicitor on receipt of the euro amount sold; this can be a particularly useful 'plus' for those overseas investors who do not actually hold a bank account in the UK. We're not saying that our client is better off because he chose not to fool around and wait to see what happened to the GBP/EUR exchange rate. He is yet to actually complete on the property purchase and we have made no apologies for the fact that the rate could actually improve for him between now and then which would, had he held off on the conversion, have meant he paid less. But, the fact that he had enough EUR to buy the sterling he needed and, the fact that he simply did not want to have to fret about minute movements in the rate, means he is in the distinct minority. To summarise the point of this post: anyone who advises you with certainty as to the movement of an exchange rate is, frankly, being reckless with your money. Estate agents and property search agents dealing with buyers purchasing in the UK but with funds outside of it are doing their customers a disservice by not mentioning/recommending they at least speak with an FX dealer. It could benefit all and, provided the dealer is carefully chosen, embarrasses no one if the services are in fact unnecessary. Rather than focusing on the rate, focus on the sums involved and whether or not you can protect against them increasing. Every recommendation we provide is scrupulously tailored to both the objectives and the priorities of our client. If you would like to discuss our work further, have a client thinking of buying in a foreign currency or simply wish to introduce yourself to us and our team then please do call us on +44 (0) 2031728193.