If something goes wrong when you use a money transfer firm or foreign exchange (FX) broker, you can’t use the same process to get your money back as you would with a bank. Here you can find out how to make safe money transfers.
Is your money safe with a foreign exchange broker or money transfer firm?
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 Financial Conduct Authority (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.
What protection do authorised firms offer?
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.
What protection do registered firms offer?
Smaller firms can choose to be registered rather than authorised.
Registration is a much weaker level of protection, since the firm just needs to show the Financial Conduct Authority:
- it’s based in the UK
- 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.
How to check whether a firm is authorised
The FCA keeps a list of all authorised and registered firms.
If a firm isn’t on the register it’s not necessarily bad news. It might be because the firm is based in another EU country instead of the UK.
Check the firm’s paperwork – it should give the details of which country has authorised the firm.
Or, you can check on EU authorisation through the Financial Conduct Authority’s consumer helpline on 0800 111 6768*.
If a firm isn’t registered with the FCA – or another EU regulator – you should avoid it, as it might be operating illegally.
*Open Monday to Friday, 8am to 6pm and Saturday 9am to 1pm.
Sending money safely – get it in writing
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:
- what exchange rate will be used
- what charges and fees to expect
- a reference number for completed transfers
- how the person you’re sending money to can collect it
- confirmation of the transaction details, including the final cost and exchange rate and how long it will take for the money to be transferred.
Top tips for safer money transfers
- If you’re sending a lot of money, make sure the firm is authorised.
- If a firm isn’t authorised or registered with the FCA – or another EU regulator – don’t use them.
What to do if things go wrong
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.
More on international money transfers
To better understand your options for making international money transfers – whether you’re using a bank, money transfer firm or foreign exchange broker – read our guide on How to send money overseas.
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