Foreign exchange nightmare

yorica

Having signed up for a well known online forex website I had hoped to transfer 50k from Japan to the UK. The 50k was a present from my father in law to pay for building work in the UK.

Unfortunately the bank in Japan seem to want a lot of background checks and filling in paperwork before they would transfer the money to the forex account and so we decided to cancel the transaction. The forex website has now charged us £2k for cancelling. A charge we can ill afford and has come out of the blue.

Obviously this was buried in their T & C's. A huge mistake by me and a huge degree of trust lost between my wife and I.

I'm now distraught as I have no means of paying for this charge. £2k for what exactly - nothing actually happened.

This is a grave warning to those signing up for so-called user friendly online forex sites.

Any advice on my plight would be welcome.

Reaper

Which company? Why was there a charge?

D_Dickenson

£2k from £50k is 4% which sounds a lot even if they had completed the service - for doing nothing it is robbery.

yorica

The only way they can secure a rate of exchange is by purchasing the currency as soon as we receive the order. This means that the only way to then cancel the trade is by placing a reversing transaction but this was at a much worse rate leading to the big loss.

Totally gutted. £2k down the drain for doing nothing.

The company name begins with H.

Generali

It's unfortunate but it is normal. The FX broker can't simply cancel a trade and so can't be expected to make you whole as it's not their fault.

I'd be having some pretty strong words with the Japanese bank. What did they want beyond the normal passport + utility bill that is demanded in most countries?

wriggly

Normally these companies make it clear that when you make an exchange, you are committing to a contract. Breaking that contract leaves you liable to any costs incurred by the other side.

You should ask the company to provide details (values in both currencies + date and time + their charges) of the trades performed (both the initial exchange and a reverse exchange when you cancelled).

You can then check the mid-market rates around the times of each exchange to ensure that they were performed at reasonable rates. For an online forex company, you should expect that the trades executed within 1% of the mid-market rate.

Their costs should be the initial yen value minus the final yen value, converted back into GBP, plus a reasonable charge for admin (being generous, say £100).

Depending on the movements in rates, that might be in the region of £2000. If not, you should negotiate with them based on your calculations.

wriggly

And maybe try using CurrencyFair for your exchange. They give better rates and will not perform the exchange until your JPY is with them, so you can be sure you won't hit the same problem with the currency exchange. (Of course, you might get the same problem with the Japanese bank).

EDIT: sorry, just checked and they don't support JPY yet.