Currency firm 4X wants banks to come clean on rates

Helen Scott, managing director of 4X Currency Corporation, told The Yorkshire Post that businesses and consumers are paying thousands of pounds in opaque fees and charges.

While prices for most products can easily be compared between providers, a lack of transparency in foreign exchange makes this impossible.

Last year, British and US regulators fined banks on both sides of the Atlantic billions of pounds after wide-spread rate rigging was uncovered.

The purchase of foreign currency should be like any other commodity, Ms Scott said.

“It’s not like other industries,” she said.

“You go and buy a TV, you can go online and compare. You can’t do that with currency - you should be able to, but it doesn’t suit the banks or the specialist currency companies to do that.”

4X Currency Corporation offers two services: 4X, for business customers and recently-launched Eris FX, for consumers.

Both offer live dealing rates for comparison and a “what you see is what you get” pricing structure. Deals are done at a guaranteed rate and there are no fees for same-day transfers.

The company is the first in the industry to publish dealing rates, Ms Scott said. Banks are not obligated to reveal anything about their pricing structures and generally will only state wholesale rates, with commission and fees added later or built into the rate offered when the deal is made.

“We don’t think that’s fair,” Ms Scott said.

“We think put it out there, open and honest, everybody gets the same deal. For the same deal at the same time, it’s there on our website and everybody gets the same rate. We’re challenging the industry to do the same.”

4X was founded in 2004 when Ms Scott and a then-business partner spotted a gap in the market to serve companies that need to pay suppliers and receive money from customers in different currencies.

The firm spent two years building its bespoke technology platform before welcoming its first customers in 2006.

Ms Scott led a management buyout two years ago, before receiving a £310,000 equity-linked investment from Finance Yorkshire in 2013.

4X currently has 3,500 registered customers, most of whom are small business and individuals buying property abroad.

While it is difficult to judge what savings 4X delivers due to the lack of information on dealing rates, Ms Scott said.

“What we say is on a £100,000 deal, we can sometimes save customers £3,000 to £4,000,” she said. “We’ve had customers tell us that.”

The business is set up to be able to cut out a lot of the costs that could add up in fees with other organisations.

Ms Scott said: “We’ve spent all this money developing the software, so we don’t have dealers to pay, we don’t have high overheads in terms of massive staff costs, we’ve automated through technology the whole process.

“It means our costs of doing the deals is low, therefore we can pass enormous savings on to customers.”

Eris FX was launched late last year for individuals who want the best rates. It has also launched a comparison tool for users.

“Eris was the Greek goddess of disruption,” Ms Scott said. “We are disrupting the status quo.”

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The Forex rigging scandal:

Last year saw massive fines imposed on banks by UK and US regulators, after foreign exchange rate rigging came to the fore.

HSBC, the Royal Bank of Scotland, Citibank, JPMorgan Chase and UBS were collectively fined £2.6bn. A probe into Barclays is yet to settle.

The Financial Conduct Authority’s investigation into the institutions with “the worst misconduct” found that dealers had shared confidential information about clients’ intentions in order to manipulate the market.

As a result of “ineffective controls” at the banks, traders colluded in a way that could “disadvantage” clients, it said.