Exchanging Thoughts

Banks are ripping you off and are keeping it quiet!

My frustration has reached new heights this week. My wine consumption has increased dramatically with the latest facts that have come to my ears, and I’m not sure they even make a big enough soapbox for me to stand on.

You may remember in my previous writings I had a good rant against the lack of transparency in the foreign exchange market. You can’t compare currency prices between the different banks, because banks will only give you a dealing quote if you have your account with them.

In the absence of being able to obtain any meaningful rates comparisons, the SME market is pretty well stuck with using its own bank. It has been estimated that, in the UK alone, there are several hundred thousand SME companies trading overseas and therefore with a currency requirement. They may well not know how much over the odds they are paying.

At 4X we know we can save an average SME some £12,000 per year on its foreign exchange. If we are conservative and say that only applies to a fraction of the market, say 100,000 companies out of the 850,000 or so SME’s, that is a staggering 1.2 BILLION pounds per year! But we’d like to prove that.

Well, being the resourceful types, we decided we would do our own bit of research. We are exhibiting at the FDI Expo at ExCel in London next week, and thought it would be nice to give our visitors a few facts and figures regarding the rates charged by the various banks compared to using 4X.

Knowing that we couldn’t get these ourselves, we contacted a few of our friendly customers to see if they would each ask their respective banks for a Euro rate. Easy enough, you would think, just synchronise the time for the requests and Bob’s your uncle.

Not so! Two of the banks contacted – HSBC and Nat West – wouldn’t give a currency rate EVEN TO THEIR OWN CUSTOMERS!!

HSBC firstly insisted on seeing the funds in the account before they would quote a rate. When told they would be transferred from another account they said they would only give a rate when the customer had made the transfer and was at the point of doing the trade, therefore skilfully removing any possibility of shopping around in advance. Clever.

Nat West, on the other hand, insisted on having the request in writing. Once it had been processed, they said, they would call the customer back with a rate and give him 20 seconds to accept or reject it, again removing the option of shopping around. If the rate was rejected, the customer could try again (and here comes the joke) the next day!

The next day!! One rate a day! Currency rates move up to three times a second. 4X provides more than half a million rates per day. How on earth is a business supposed to get the best deal if it can only request one rate a day? The whole thing is completely scandalous.

Of the others, Barclays would only give an indicative rate, reserving the right to change it at the point of actually doing the deal. The indicative rate was some two cents below the rate 4X was charging to buy 165,000 Euros, and even if they had honoured it, that rate would have cost the customer a whopping £1,784 extra.

Bank of Scotland, to their credit, did give a rate, and it would only have cost £876 extra compared to 4X, which, given the competition, makes them look almost like saints.

What can be done? Well, on the face of it, nothing. The banks have got the SME market right where they want it, and legislation is on their side. There is no obligation to disclose prices, or indeed the profit that the bank has made out of the deal.

The whole situation is completely unacceptable.

There is no reason on earth why the banks can’t be completely transparent with their pricing, except that they don’t want to be. They have the technology to get and display up-to-the second rates, just as we do. But if they did, it would simply expose the huge profits they are making out of the SME market in foreign exchange deals. The aforesaid £1.2 billion would a) make a big dent in their profits, and b) be rather embarrassing.

So, all we can do is start to put pressure on, and bring the whole sorry shambles to light. I am being featured in the Daily Express  soon, and I will make every endeavour to bring price transparency into the arena. Here at 4X we are completely transparent with our dealing rates and are determined to make others be the same.

So that’s it. End of this week’s rant. There will be more, but I must stop now. I just need to pop out and commission a specially large and robust soapbox – I think I may need it.

New currency exchange service helps reduce risk for small businesses

I’ve been waiting anxiously for news on the members of the Russian doomsday cult which has been living in a cave for the last six months, and finally it came. They’ve all come out.  It all went a bit quiet after they went in there in October, armed with little more than some jars of pickled mushrooms and a conviction that the  world was about to end. Presumably the mushrooms were chosen because they do not fall into the category of processed food or carry bar codes, both of which the group believes are the work of Satan.

Their belief that the end was nigh was instilled in them by their leader, Pavel Kuznetsov, (currently undergoing psychiatric treatment) who predicted that the apocalypse would happen in April or May. Frankly, having survived the winter, which can’t be pleasant in a Russian cave, I’m a bit disappointed that they threw in the towel at the eleventh hour. Still at least they had a go.

Speaking of predicting the future, most of us can’t. And it’s a brave person these days who knows where these currency markets are going, or is willing to take a risk on them.

To that end, the good news is we have just launched our new forward trading service on the dealing platform, 4X Dealer. For those of you unfamiliar with a forward trade, it is simply ‘buy now, pay later’, and is a useful tool against the unpredictable foreign exchange market.

For example, if you are a business that knows you will receive US dollars in six month’s time, you can eliminate the risk of what the currency rate will be by selling the dollars now for settlement in six months. If the dollar weakens, you are locked into today’s rate. Of course, if it strengthens you will miss out on making extra profit, but many, especially smaller, businesses are more interested in minimising risk than taking a gamble on exchange rates.

We have an easy to use demo which shows you how a forward trade works, I have also been through the product in the attached video. If you want further information you can also check out our news release on the new service.

Forward trading may be the safe option, but just think of it this way. Surely it’s a better way of hedging your bets than sitting in a damp Russian cave with nothing to eat but mushrooms…

Technorati Tags: 4X Currency Corporation,Helen Scott,Forward Trading Currency,Russian Cult,SME business benefits

Trains, planes and automobiles and maybe even a blackberry

Well, what a strange week it’s been again. I’m beginning to wonder if this really is England. No earthquakes this week, but hurricanes.

And very badly-timed ones at that. The winds and rain struck just on the day I had to go to London to be judged as a finalist in the Blackberry Women and Technology awards where I have been short-listed in the Small and Medium sized Business category, and I had to get there and back in a day from Leeds.

The problem was the weather wasn’t playing ball and the trains didn’t like it. When I finally managed to get on one that was actually running, we were down to a 50mph speed limit because of the high winds, and worse, no bacon sandwiches!

It was all looking quite hopeless, but eventually the sun came out and we did get to London. Half an hour with the judges, then whisked to hair and make up to look very glam, then some filming for the big night.

So fingers crossed for 6^th May when the results are announced at a glittering ceremony. If nothing else, a Blackberry is the perfect vehicle for the mobile version of 4X Dealer™, which our programmers at Cybertrak will be working on soon for all those busy travelling Finance Directors.

I think FD’s are likely to want to keep an even closer eye on the foreign exchange markets at the moment. The Dollar continues to record new lows against the Euro on an almost daily basis, and is showing no signs of stopping. Similarly the Pound against the Euro.

This should be fantastic for UK companies exporting to Europe, and if they want a favourable Euro rate they should check out our latest web rates on 4X Dealer™.

Anyway, probably time to stop now. I’m just looking out of the window and the sun is shining. England, March, it’s not bad.

Technorati Tags: 4X Dealer,Currency,SME,Blackberry,Technology

Bill Gates has a tough week and the US catches a cold

It’s been a tough week for Bill Gates. According to the Forbes annual billionaires list, he has been overtaken as the richest man in the world by his friend Warren Buffett, who is now worth 62 billion Dollars. Gates made only a paltry 2 billion Dollars last year.

Elsewhere, many would like to have such a problem. The slew of bad news continues both at home and abroad.

Rising fuel and food costs, along with tighter borrowing conditions are hitting consumers hard in the UK. This has pushed the Consumer Confidence Index to its lowest level since the survey began.

A report from the Confederation of British Industry and Grant Thornton that said levels of business volumes and values in the service sector were rated ‘well below normal’.

Firms providing services to consumers, such as hotels, bars, restaurants, cinemas and gyms, were particularly pessimistic about the general business situation, with the steepest fall in optimism since November 2001.

And the result of all that was another week, another all-time low for the Pound against the Euro.

At nearly 77p to the Euro a café au lait and a croissant in a small French village don’t seem nearly as attractive. Britons with second homes aboard are facing a grim year, with the value of property across Europe likely to fall as the long-running continental housing boom finally runs out of steam, the Royal Institution of Chartered Surveyors warns.

The good news is that for those returning to the UK, the rises in continental property prices combined with the strength of the Euro will net a tidy profit when converting back into Sterling, and 4X’s new forward buying service means customers can lock in the current rate against future weakening of the Euro.

However the troubles in the European housing market pale into insignificance compared to America.

The number of US home repossessions, and the speed at which they were being repossessed, hit record levels in the fourth quarter of 2007, figures from the Mortgage Bankers Association showed on Thursday.

Separate data from the Federal Reserve showed that the amount of equity Americans have in their homes has dropped below 50% for the first time since 1945.

Added to this, the Dollar has plunged to new low after new low, making Asian goods, where the economies rely heavily on exports to the US, relatively expensive and tipping all the stockmarkets around the globe into huge falls.

The net result is the old adage – "when America sneezes the whole world catches a cold". Whether it will turn into pneumonia remains to be seen.

However, amidst all the gloom, it’s good to know that there is a ray of light, and some people are benefiting from the weak US Dollar.

The relative strength of the Euro against the Dollar saw the fortune of Liliane Bettencourt, of French cosmetic’s company L’Oreal, reach 22.9 billion Dollars last year and turn her into the richest woman in the world. Is that fair? Oh I think so.

All together now – because she’s worth it!

Technorati Tags: Helen Scott,Bill Gates,L'Oreal,Euro,Dollar,Currency Exchange,currency

Another day, another Euro - one giant leap into currency...

Today, if you hadn’t noticed, is the 29th of February, and rumblings have been heard.  No, not another earthquake, but the mutterings of discontent of the great British workforce. 

The gist of the gripe is that the extra leap day means that employers are getting a day’s free work out of their employees and that said employees should either a) be paid for an extra day’s work, or b) get the day off.  

This is clearly nonsense.  Anyone who gets paid hourly is presumably getting paid for the extra working hours.  Anyone on a salary is getting paid for the month.  All months are not equal, but an annual salary is divided into 12 equal proportions, despite the fact that some months are longer than others.  What people have failed to realise is that February, at 29 days, still shorter than every other month, so you are in fact getting paid more. But for what?

According to the Office of National Statistics, in 2006 productivity for the British worker was the lowest of all the G7 countries.    It was also considerably behind the US, which managed to produce a whopping 28% more per worker than we did.  The only one who did worse than us was Japan.

Productivity is one of the major factor in competitiveness, and one fact that has emerged this week, is that the UK is losing out in international trade, with a net 8% of exporters reporting demand below normal for February. 

The recent devaluation of Sterling to its all-time low against the Euro should have helped exports.  It might boost this a bit over the coming months, making our goods more attractive on the Continent.

However, a weak currency does not in itself increase competitiveness.  Inflation also plays its part, and the bad news for us is that energy and fuel prices are on the rise, pushing inflation towards 3%. 

Now all this reads to me as quite worrying. Falling exports is not a good position to be in, and, call me a killjoy, but frankly I just don’t think the British worker is in any position to cruise.  Much less to demand extra money or holidays for producing less per capita than almost every other developed nation in the world.

I have an idea. If employers are paying their employees the same amount of money every month, surely they should get the same amount of work every month as well?

Therefore, contrary to granting the 29th of February as an extra day’s holiday, employers should in fact be demanding three extra working days every normal February, and one extra day every 30-day month, thus bringing them all in line with, say, July, or the other 31-day months. 

Workers could choose to either give up a weekend to complete the extra days, or pay someone else to do it.  Productivity would rocket and we would be competitive again.  Drastic, I know, but we may well be sailing into drastic times…

Technorati Tags: Leap year,Currency Exchange,Euo,Exchange rate,devlaution of sterling

Rising gas prices are enough to drive us all to drink

There’s been a bit of a nip in the air this week. It may be something to do with the sudden cold snap we had on Monday. I was rather unprepared for the freezing fog and the icy ground that greeted me when I threw open the curtains. But although the weather has warmed up a bit now, somehow the chill still seems to be there…

I think it’s just one of those weeks where it’s hard to find anything to warm you up, either physically or metaphorically. Let me illustrate what I mean by a few examples of the stuff that has surfaced in the news this week.

1. More than one in three small businesses has lost money as result of errors in international banking transactions, costing every small company in the country an average of £400 per year.

Despite the fact that more than half such errors are the fault of their bank, 17% of companies have been charged extra fees to rectify the problem. The whole thing costs the small business community some £100m per year.

2. British Gas has reported profits of £571m in 2007 for its residential arm, up from £95m in 2006, a year-on-year increase of some 600%.

Rather than reduce fuel prices to its customers, it has instead decided to raise them by 15%.

3. The cost of barley is now so high that a pint of beer in a pub will soon cost £4.

Re. point 1, I would advocate smaller businesses to think seriously about who they use to facilitate their overseas payments. The common mistakes: incorrect account names; human error; bank delays and problems with unsophisticated foreign receiving banks need not happen if you use a specialist electronic provider such as ourselves. We are set up specifically to deal with all this.

I can’t do much about points 2 and 3, but I do have a suggestion.

If your average small businessman is £400 a year out of pocket, he’s not going to be able to take solace at home because he won’t be able to afford to pay his new British Gas bill to keep his house warm.

The obvious place to go is down the pub, where it is not only warm and friendly, he can have a glass of ale and forget his financial sorrows. But at £4 a pint he can’t afford to do that either.

Why not then introduce a new tax on the banks and British Gas, which makes them donate their excess profits to beer? The £600 million or so collected would release an extra 150 million pints of free beer a year, thus giving everyone a warm and happy feeling and eliminating the need to go home and pay the gas bill.

Do you know, I’m not sure I need this balaclava on any more……

Technorati Tags: British Gas,Beer

Technorati Tags: Barley,Financial advice

I wonder if I could get hold of a cheap toe?

It’s mid February. About three months to go until the Edinburgh marathon, for which I should now be training madly. I haven’t booked my place yet – I was just mulling the various worthwhile causes to offer my jogging services to when I accidentally tripped over the sofa leg and broke my toe.

It sounds insignificant but it is remarkable how much you miss your little toe when it is in several pieces. The pain has subsided over the last couple of weeks, but I am still banned from wearing anything approaching attractive footwear, and, of course, no running.

The upshot of all this is that I have more time to sit around reading and thinking, and I have just come across two very interesting but rather disturbing facts, both on the BBC news site.

One is that we in Britain are now the largest spenders on cosmetic surgery in Europe. In 2006 we spent £497 million on ‘enhancement procedures’, almost three times as much as our nearest rival, Italy. We are second only to the US in our obsession with the pursuit of the perfect body, and the industry is growing. Many Brits are travelling abroad for these procedures, (in which case come to us for your currency needs – we might save you enough for an extra little nip or tuck).

The other is that one in five Britons has admitted to buying fake goods, and doesn’t see anything wrong with it. Sometimes they don’t know they are fake, but often they do and don’t care. Counterfeit merchandise is apparently a hugely growing area of business, costing UK businesses some £11 billion per year in lost revenue, and accounting for an estimated 30% of sales in some products. The counterfeit industry is now worth some 7% of all global trade.

The logical question that comes out of all this is how much overlap is there between the two stories? Has this counterfeiting business spread to the cosmetic implant industry yet? Are we British jetting to foreign climes and paying for what we believe to be real false body parts, only to be given cheap imitations from China? How many are in fact walking around with ‘fake fakes’? Whilst I in no way condone any illegitimate business activity, it has made me think… wonder if I could get hold of a cheap toe?

Technorati Tags: Edinburgh Marathon,Running,4X Currency Corporation,Currency Exchange,Helen Scott

Welcome to my currency exchange blog

Hello and welcome to my inaugural blog post. This really is my first one, and as such I’d better do a quick introduction to myself and the company. And perhaps tell you why I think currency is such an exciting subject that I’m going to be writing regularly about it here on my blog. Hopefully, I might even convince you to read about it.

First things first – I’m Helen Scott and I’m the managing director of 4X Currency Corporation. I had 17 years in the City as a trader and marketmaker, and most recently a pension fund manager, before deciding to start a currency business with serial entrepreneur Martyn Redman.

We (4X) are based in Brighton, and if I can blow our trumpet a little bit, we have some world-first currency exchange software. Our overall aim is to get the SME market away from the mercy of the banks, and give them a cost-effective and simple foreign exchange service direct to their PC. In other words we save them money and time.

We’re proud of what we do – the software is fantastic and has taken four years of hard work, and a dogged refusal to give up, to get it to where it is. And it’s simple enough for even the most hardened technophobe to handle.

We don’t believe in the hard sell – we won’t be making unsolicited phone calls or using scare-mongering stories to rush deals through. Instead we hope to educate and guide, try to demystify how businesses can take control of their currency needs, and maybe even turn them to an advantage.

I’ve got a lot to say about the foreign exchange industry in general, how it works and how it affects businesses of all sizes. Basically, the current system stinks. You get more information and protection buying a loaf of bread than a hundred thousand Euros. Smaller businesses in particular get a raw deal on rate and service, transparency of pricing is a particular problem, and because it doesn’t yet come under the FSA there is precious little they can do about it.

Over the next few months I will be commenting on a range of topics, all of them pertinent to the SME market and overseas trade. I might not always be polite, (after all they still call a spade a spade where I come from), sometimes controversial, but hope I will at least make you think. The FX industry is crying out for reform, and for us it can’t come soon enough.

Technorati Tags: Personal finance,Helen Scott,4X,financial advice,foreign currency