Simon Hilton

Simon Hilton is a senior foreign exchange consultant at World First specialising in assisting private clients and companies with their foreign exchange transactions. Simon is authorised by the FSA to offer foreign currency options.

Click here to submit a question for Simon to answer publicly next month (please note that Simon is only able to answer a selection of questions received but all questions are read and considered.) Alternatively, click here for a free, no-obligation quote.

---

7/9/09 - M. Johnson asks:

"Why shouldn’t I just use the bank to send money overseas? What can a foreign exchange broker do for me?"

Simon's reply:

Clients often ask me why they shouldn’t use the banks to exchange and send currency. Unfortunately the banks do not generally offer the most competitive rates of exchange and levy other fees and charges.

Our clients tell us that on average we save them between 1 and 4% on the rate and up to £40 in transfer costs.

Although 1% may not sound like a huge amount if you are transferring £200,000 this can make a significant difference to the amount of foreign currency you receive.

Equally if you are only sending a few hundred dollars per month and have to pay hefty transfer charges this can take a large slice out of the money you receive.

Foreign exchange brokers also offer a much more personal service than the banks. Once you open an account you are assigned your own personal dealer who will keep you informed on movements in the exchange rate and help you decide when to make your exchange.

Brokers offer a number of tailored currency products to help you maximise your money. These include Spot contracts, Forward contracts and Options.

A Spot contract allows you to buy a currency for delivery in 2 working days time. This is useful if you have an immediate need to transfer your money.

A Forward Contract allows you to prebook the exchange rate up to 2 years in advance. The advantage of this is that you can secure the amount of currency you will receive and will not be subject to any future fluctuations in the exchange rate.

If you are transferring a large amount abroad some FSA regulated brokers such as World First also offer a relatively new product called ‘Currency Options’. These give you the certainty of a fixed rate of exchange like a forward contract but also allow you to take advantage if the rate subsequently improves.

---

5/9/09 - P.K. asks:

"I am emigrating in the next few months and will need to transfer the proceeds of my house sale. When should I fix the exchange rate?"

Simon's reply:

There is no easy answer to this. Exchange rates can move by several percent over the course of a single day, let alone a few months.

If rates are particularly favourable it may be worth considering forward fixing the exchange rate in advance. This allows you secure a rate and eliminates any risk of the rates falling lower.

However if rates are low at the time this may not seem as attractive. Your personal dealer will be happy monitor rates for you and let you know about any economic releases which may affect the rates.

---

3/9/09 - Alan asks:

"Do currency brokers only transfer large amounts?"

Simon's reply:

While a broker can definitely help you move larger amounts such as the proceeds of a property sale they can also assist with smaller amounts (we, for example, can transfer as little as £250) or regular payments such as pension transfers or monthly mortgage costs.

---

1/9/09 - Jill M. asks:

"I am concerned about the security of my funds. How safe is my money when using a foreign exchange broker?"

Simon's reply:

I completely understand concerns about security. In the current climate it is prudent and sensible to make sure you are fully comfortable with any company you deal with.

All currency brokers should be regulated by HM Revenue and Customs as a Money Services Business. This can be verified by calling them independently and quoting the post code of the broker.

As a Money Services Business brokers follow a strict code which incorporates all the requirements of the 2007 Money Laundering Regulations and other legislation. We are required to maintain strict security, documentation and audit processes.

All funds sent to us are held in segregated client accounts that are only used for client transactions and are totally independent of the day-day business accounts of the company.

Brokers such as World First Markets which offer more specialised products such as Currency Options are also regulated by the Financial Services Authority in the UK. Again this can be verified by visiting the FSA website.

Established foreign exchange brokers should also be able to provide you with client and bank references, and a copy of their company accounts on request.

---

1/9/09 - Michelle E. asks:

"What would I use a foreign exchange broker for?"

Simon's reply:

Emigration, buying a home abroad, transferring your salary, paying overseas suppliers or any other purpose you can think of.

A currency broker can save you money wherever and whenever you are looking to exchange and transfer funds.

---

Click here to submit a question for Simon to answer publicly next month (please note that Simon is only able to answer a selection of questions received but all questions are read and considered.) Alternatively, click here for a free, no-obligation quote.

--