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Currency Exchange for Sending Money to France

1. Currency Exchange Regulatory Framework

Whether you are relocating to France or you are merely buying a holiday home, if you come from outside of the Eurozone you will need to contend with the issue of currency exchange.

The process today of obtaining foreign currency seems far removed from the laborious and expensive high street bank controlled processes available in the past.

With the internet and the growth of specialist currency exchange brokers, it has become a much easier and cheaper process to transfer money to France.

On-line systems now enable you to buy and sell direct, while specialised currency brokers offer a service, fee structure and rates that are superior to those of the banks.

It is, therefore, a very competitive market place.

Nevertheless, there remains a level of opaqueness about it, making it difficult for the consumer to make an informed choice.

Moreover, the collapse of the company Crown Currency Exchange in 2010 surely served a timely reminder that the regulatory framework has been slow to keep pace with the growth in the supply side. Thousands of customers never recovered the money they had deposited with the broker.

Within Europe, the legal framework is set out in the Payment Services Directive (PSD 2007/64/EC), which Member States are required to have implemented by the end of 2009.

This has occurred in the UK in the form of the Payment Services Regulations 2009 (as amended by the PSR 2012).

These regulations are supervised by the Financial Conduct Authority (FCA), which is the regulatory authority for currency exchange.

The PSRs require that anyone providing payment services by way of business in the UK is required to either be authorised or registered by the FCA as a 'payment institution' (PI).

There are two types of PIs:

i. Small Payment Institutions (SPIs) Those with payment transactions of less than £3 million per month who are required to register with the FSA;

ii. Authorised Payment Insitutions (PIs)- Those those with payment transactions above this figure who need to be authorised by the FCA.

Firms with a turnover of under £3 million are not required by the FCA to hold any spare capital or safeguard client funds. By contrast, there are strict safeguarding and capital requirements for all PIs.

You can check the status of the firm on the FCA on-line register.

In practice, you will find that most currency brokers today are now 'authorised' simply because the banks refuse to deal with those that do not offer that level of protection.

In addition, the PSRs provide a legal framework concerning:

i. Charges - this sets out what charging models are allowed in terms of how charges are allocated between the payer and the payee.

ii. Evidence on authentication and execution of payment transaction – this puts the onus on the payment service provider to prove that a transaction was correctly executed when a customer claims it was not.

iii. Execution of payment transactions – amongst other things, sets out the rules on how the time of receipt of a payment order is established and what a payment service provider must do if it refuses a payment order.

iv. Execution time – set out that funds must be transferred by the business day following receipt of the payment order and that the funds must be available for the payee as soon as they are received.

v. Dispute Resolution - All PIs are required to have a FCA compliant dispute procedure and consumers have a right to make a complaint to the Financial Ombudsman Service (FOS).

There are of course also controls to prevent money laundering, but these are not designed to protect the consumer.