Crown Currency Exchange: Foreign Exchange, Hayle, Cornwall

On Monday 4^th October 2010, Crown Currency Exchange, based in Hayle, went into liquidation - with over 13,000 customers losing their holiday money without warning.  There were hints something wasn't right when customers didn't receive the currency they expected from 1st October, the previous Friday.  After an agonisingly long weekend of wondering what was going on, it became horrifically clear the following Monday.

£millions lost!

The company had over 40 employees and dealt with members of the public, selling them foreign currency mostly for their honeymoon trips, holidays and even house purchases abroad.

The UK don't use the Euro as a currency, they stayed out of the Euro. This means that holidaymakers going anywhere in the world will need to change their English/British currency from GBP into the currency of the country they're visiting. Mostly this is into US$ or Euros.

An average family, saving up for a "trip of a lifetime", to perhaps Disneyland, Florida, would typically exchange about £2000-3000 into US$ ahead of their trips.

One of the ways Crown Currency Exchange kept the rates low was by not offering credit cards as a way to buy the foreign exchange, instead relying on people paying by cash, cheque and money wired direct from their accounts.

Mostly Crown Currency Exchange had built up a good reputation, many people had used them repeatedly - always getting good deals.

But, with Crown Currency Exchange, one of the ways to get the best rates was to buy currency futures. People were buying currency on fixed future dates at fixed (good) prices. Therefore there was a lot more "cash" in the system and in the business than a company who were trading cash for cash on the day.

The first time people noticed things not quite right was about 1 October, when people started asking in forums if others were having problems. That was a Thursday and by Friday forums were awash with groups of people who were trying to get answers. But there were no answers. The website was down, the phones not answered.

Then, on Monday there was an announcement that the Liquidators had been sent in.

The story's still unravelling as thousands of worried currency buyers are only just waking up to the fact their holiday money isn't arriving.

A lot of people believed their money would be safe. It'd be a nuisance that they now had to find some way to beg/borrow £2000 or so from friends/family at the last minute in order to go on holiday, but they felt a little secure that they'd get the money back.

But it doesn't seem to be the case.

Because of the way people were buying the currency futures, they had no protection from their credit card companies, as they weren't using their cards.

Also, the customer money wasn't ring-fenced into a separate and safe customer account.

Is There FSA Protection for People Who Lost Money?

The Financial Services Authority (FSA) in the UK is there to protect customers. If a bank goes under your savings are protected to up to £50k per institution. The FSA have other similar schemes and organisations are either part of an FSA scheme or not.

Crown Currency Exchange appeared to be registered with the FSA, but on inspection it looks like they registered just to say they intended to ring-fence the money. There was no requirement for them to actually have a separate/safe account until their turnover reached an amount higher than it was.

No. Unless it can be proven, at some future date, that there was wrong-doing going on, it wasn't a scam.

Crown Currency Exchange in Hayle would appear to be a regular, honest business.

Although the Directors had previously owned and run other companies which had also gone out of business.

The true answers come out in time.

So, spare a thought for all those people who had saved for years to go on a trip of a lifetime holiday - only to now find they've lost their money.

Tor FX, Penzance

This is an entirely separate company, owned and run by different people entirely, although there have been direct family links in the past.  You should do your own research on the connection between the two if you're keen to find out.

On 5 October Tor FX published a statement to distance themselves from Crown Currency Exchange.

The current most active forum/helpgroup to find out what is going on with Crown Currency is the Moneysavingexpert.com forum, Martin Lewis of MoneysavingExpert fame.

There, cash losers are gathering together stories and facts.

If you have been affected there's help here:

• FACEBOOK GROUP: Join Facebook, then join the group. Template letters to send to your MP.
• Wordpress Blog: Don't want to join Facebook - keep up to date by reading the updated Wordpress blog
• Moneysaving Expert special Crown Currency Exchange Forum.

Links for all three of these are here.....

Website: October 2010

A new website was set up for victims of the Crown Currency Exchange business failure.

Website: http://crowncurrencyactiongroup.org.uk - this website no longer loads.

Crown Currency Action Group brings together victims, who have lost thousands, to help fight their corner and find out the truth.

Wordpress Blog:

This was closed down. http://crowncurrencypayback.wordpress.com/

Facebook:

This account was deleted

Twitter: There is a Twitter feed which, at the time of writing, was last operated in May 2011.

https://twitter.com/CCActionGroup

(Last checked: April 2013)

Petr Kratochvil: British Money