In today’s post, the team at MyCurrencyTransfer.com look at the role of the FCA, why it now regulates the money transfer industry (replacing the Financial Services Authority – FSA), and why it’s important to transfer money abroad with a fully regulated foreign exchange company.
The role of the Financial Conduct Authority (FCA)?
The Financial Conduct Authority (FCA) is one of the new regulators tasked with regulating financial services in the United Kingdom. It was one of the first major changes to the regulatory environment enacted by the Conservative led coalition when coming to power.
According to Owain Walters of The FX Firm, ”The new government was unhappy with the track record of the then regulator, the Financial Services Authority (FSA) and decided to move regulatory oversight back to the Bank of England. From there, the Bank of England set up the Prudential Regulation Authority, whose remit covers institutions which pose “systemic” risks to the financial system; banks etc.”
The FCA will help to regulate the money transfer market in the following ways:
(1) Securing an appropriate degree of protection for consumers
(2) Promoting efficiency and choice in the market for financial services, and
(3) Protecting and enhancing the integrity of the UK financial system.
In short, they will be making sure that customers are treated fairly and aren’t mis-sold certain products.
What is the Financial Conduct Authority (FCA)?
The FCA is tasked with regulating companies who do not pose systemic risks but who provide financial services to the public. They provide the regulatory framework that companies, including foreign Exchange brokers and international payment companies, must follow to ensure that customers are treated fairly and whose money remains safe throughout the companies dealings with customers. Whist cosmetically it looks the same as the previous regulatory regime, the FCA will have much more industry experts to provide a more robust oversight of regulated financial services companies. Walters believes this is a good move ”Any good company will welcome this development as it should increase trust and confidence in financial service companies.”
What should I check when using a foreign exchange company to make an international money transfer?
When considering which company to use when moving money abroad, it is important to check they are authorised to operate by the Financial Conduct Authority (FCA) as it ensures that the company has demonstrated robust operational procedures to safeguard client money, has proven that it has sufficient capital in the company to operate safely and it has been vetted by the national regulators. Once you are satisfied the company is authorised, it is of course important to check the rates and online reviews to get a feel of previous customers experiences. Any good broker will welcome the opportunity to talk to you about their service so feel free to give them a call to ask any questions.
Why should you only transact with a money transfer company regulated by the FCA (Financial Conduct Authority)?
Owain Walters of the FX Firm comments, ”The FX Firm welcomes stronger regulation and are pleased to Authorised to the highest possible requirements. Like most brokers, the safeguarding of client money is the prime concern and many efforts go into making sure that funds are always safe. Robust operational procedures, sophisticated IT systems and a single point of contact for each client helps The FX Firm ensure that your money is safe and ensures a fast service. The FX Firm also operated “Segregated Client Money” accounts with Barclays Bank, which ring-fences clients money from the company accounts. So even if all of the regulation and operational procedures fail and something happens to your broker, your money is ring-fenced and protected.”
The importance of foreign exchange companies operating segregated client accounts
With regards to segregated client accounts, James Glynne-Percy of World First comments ”The Payment Services Regulations 2009 stipulate that all funds held in such accounts cannot be claimed by creditors. All funds sent to us are held in segregated accounts that are only used for client transactions and are independent of World First‘s business accounts.”
Have a great day & remember to strongly check the regulatory credentials of the money transfer companies you choose to trade with.
To compare money transfer companies, visit MyCurrencyTransfer.com
To visit the Financial Conduct Authority website, visit the FCA website
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