Currencies Direct, one of Europe’s largest independent foreign exchange specialists, recently undertook a detailed survey of the leading high street banks and specialist foreign exchange brokers to determine the level of service their customers are likely to receive when transferring money overseas. They also looked at the charges these customers would incur and the rate of exchange they would get.
It was found that those who make use of their high street bank when transferring both large one off lump sums and smaller regular payments abroad, lose out significantly financially speaking – and yet so few Britons make use of currency exchange specialists.
It is seen as somehow more convenient to use the services of the bank than to shop around to get a better deal, and as a result, Brits living abroad are losing out on money transfers from the UK, and those buying a home abroad are losing out when they make the large transfers for their home purchase.
In the survey conducted by Currencies Direct, the brokers Moneycorp, HIFX and Travelex, and the following banks we all pitted against Currencies Direct’s own level of service, charges and exchange rates: – Barclays, NatWest, Lloyds TSB and HBOS. The survey asked each bank and brokerage what they would charge a customer who wanted to buy EUR 100,000 on that day – the banks were charging on average over GBP 1,200 more than the brokers, and Currencies Direct were coming out the cheapest of all banks and brokers. What’s more, each and every single bank charged customers for making the transfer of funds.
Other than Moneycorp none of the specialist currency brokers charged fees and so it’s clear that not only do banks offer worse exchange rates to their customers, they charge them for the privilege of the currency conversion and transfer. This clearly has an impact on those buying property abroad – after all, a property purchase involves large lump sums of cash…but it also impacts those who are living abroad and who have to manage their financial affairs through a UK bank.
This include the likes of retirees who receive their pension income into a UK bank and who then need to transfer it to an overseas bank to fund their day to day living costs. It also includes those who still have assets such as a home in the UK that provides them with an income for example. These individuals could be losing out even more, in relative terms. Basically if you make smaller monthly or quarterly transfers, the rate of exchange you will receive from your bank will be even less competitive, and actually be in line with that they offer those changing holiday money! What’s more, they will charge you for the privilege of changing the currency and making the transfer – and in a large number of cases the clearing banks along the way as well as the receiving bank will all charge you too!
Mark O’Sullivan, director dealing at Currencies Direct points out at this point in the survey that leading FX brokerages actually have agreements in place with international banks that lower or even completely negate these handling and transfer fees – yet another reason to add to the long and compelling list that really suggests that anyone who has to make a transfer of cash abroad and into another currency calls on specialist currency brokers rather than just turning to their non-competitive high street bank.