Foreign Currency FAQ's
When choosing a Foreign Exchange (FX) Service Provider, there are many factors to consider:
- What kind of exchange rate can they offer; are they competitive within the market?
- What kind of services do they offer; are they flexible within your needs?
- What kind of regulation do they have, is their regulation posted on their website and advertising material? (this ensures you are dealing with a legitimate FX Service Provider)
- What kind of services do they provide once I have arrived Downunder?
The best thing to do when choosing a service provider is to shop around. Generally High Street Banks, Foreign Exchange Brokers, and some Australian and New Zealand Banks offer specialised FX services. Ring around each Bank and Broker to see what rate they are trading at, so you can compare who is most competitive. Ensure they offer a full range of FX products and services; you want to know you have flexibility and services that will suit your specific needs. Ask what kind of aftercare service they offer once you have arrived in Australia or New Zealand, you want to know you are being looked after from the start to the finish of your migration process. Most importantly, what kind of regulation does the service provider have? Are your funds protected while in the UK, in transit and once they have arrived Downunder? You can find this out by asking the service provider directly, looking on their website, and doing research on Government websites.
Generally to trade currency you will need to open some kind of trading account. These are available through several Banks in the UK, Australia and New Zealand; and FX Brokers.
Some service providers will offer deposit facilities; these enable you to have cleared funds held with the FX Service Provider so you can send the funds across as soon as the rate peaks.
Spot Contracts enable you to immediately agree on an exchange rate, and convert your funds on the spot; this is usually agreed over the phone as FX Service Providers record calls and can take your verbal instructions as authorisation. To perform a Spot Contract transfer, most FX service providers require your funds to be cleared, or the funds to be guaranteed for payment within 2 - 3 days.
Forward Contracts allow you to lock into a rate, and settle up to 12 months in the future. Longer terms may be available on request. These can be useful when your funds are not yet available, but you want to take advantage of that current day's rate. Most FX Providers will require a deposit to secure the forward contract (normally 10% of the total agreed amount) or if it is for the sale of a property, they require a solicitor's letter detailing the property's settlement. Forward Contracts can usually be entered into over the phone, but may require signed documentation to back up the contract.
You can select a target rate at which to convert your funds, this means you may be able to achieve your ideal rate. The FX Service Provider will monitor the rate during their trading hours on your behalf; if the rate hits your specified target during their trading hours they will trade the funds at your exact target rate. These target rate contracts can usually be entered into over the phone, but may require signed documentation to back up the contract.
If you are based in the UK there are several transfer options:
Electronic CHAPS Payments: An electronic Inter-bank transfer through the CHAPS system, which usually arrives as cleared funds on the same day as it is sent by your bank. Please Note: Your bank will normally charge a fee to transfer funds from your banking institution to your FX trading account.
Bankers Automated Clearing System (BACS) including Internet Payments: Funds transferred via the standard bank clearing system will take 3 - 4 working days to arrive as cleared funds into your trading account. Internet transfers are usually sent via this system, so you need to allow 3 - 4 working days for funds to reach your trading account.
Cheque: A banker's cheque or a personal cheque should be made out to the account holder(s), although this option is not accepted by many FX Service Providers. Once cheques have been received by your FX Service Provider, there is a clearance period of up to 5 working days before the funds are available to be transferred.
Instant Payment Debit Card Service: Many FX Service Providers are able to withdraw funds directly from your debit card over the phone. They will have set limits they can take off each card per day, and your issuing bank will also have set limits on card transactions. Please note: Your FX Service Provider may charge for the use of this service.
If you are outside of the UK you can use bank to bank payments within your country. The best thing to do is check with your FX Service Provider as to what kind of payment methods they accept.
Once the funds have been traded it generally takes 2 - 5 working days for them to be deposited; some receiving banks taking longer to clear funds than others. This will differ between FX Service providers, and which banks they use for their clearance. If you have a set time for your payment to be made, it's best to ask your FX Service Provider how long the trade will take from start to finish.
