One of the UK’s leading currency brokers has become FSA authorised under the new Payment Service Regulations 2009. The new legislation was brought in to govern the way money transmitters and currency brokers provide “payment services” to their customers.
TorFX provides commercial exchange rates to individuals and companies who need to make large currency transfers. Typical transactions range in value between £5,000 and £1m. By accessing foreign exchange markets directly the company is able to obtain “institutional” exchange rates and pass significant savings on to clients. This service has traditionally been the domain of the high street banks, but over the last decade a small army of independent brokers has emerged as a money saving alternative, taking advantage of what are often poor rates and expensive transfer fees offered by the banks. So popular is the service that TorFX was ranked as the second fastest growing company in the UK by the Sunday Times Fasttrack.
Until now the money transfer industry has been largely unregulated. Although HM Revenue & Customs have been responsible for enforcing anti money laundering regulations, there has been little scrutiny on the financial status of companies, their ownership, and their suitability to handle large amounts of money on behalf of individuals and companies. The good news is that consumers can now benefit from the savings on offer and gain added peace of mind from dealing with a regulated company. Companies like TorFX that are authorised for the provision of payment services are known as Payment Institutions. Smaller companies which transfer less than €3m per month are required to register with the FSA rather than seek authorisation. Registration is a far simpler process than authorisation, but it does not carry the same level of financial and regulatory scrutiny.
Authorised companies are required to safeguard client funds and maintain a defined level of capital or “own funds”. The amount of capital a company is required to hold is based on the size of the business, and can be varied by the FSA.
Firms that were operating before the end of 2007 have until 1st May 2011 to become authorised, but any firms that started after December 2007 must be registered or authorised already. That means there are still some firms that have not yet applied for authorisation, and while they may be reputable and well established, they have not been subject to the FSA checks.
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