Currency in France: getting the best exchange deal

Finding the best deal on currency can save you thousands but it can be a minefield, says Helen Scott. Here she shares her tips on how to navigate it successfully

When David and Ann Tattum got married, instead of staying in their adopted home of Yorkshire (David is a proud Lancastrian and Ann is from London), they decided to follow their dreams and build a new life in the south of France to take advantage of the warm climate and attractive lifestyle.

The move was meticulously planned. Land was secured and builders were briefed. During the construction of their house (pictured above), the Tattums needed to transfer money from the UK to France at regular intervals as stage payments to the builder, so the couple shopped around for the best deal on their international money transfers.

The cost of exchanging significant sums of currency can be frustratingly vague. Many people use their bank but this is rarely the best option, as they can charge up to 5% of the value of the deal within the exchange rate. However recent years have spawned dozens of safe, reputable, specialist currency companies, which often offer much better rates.

“We decided to use a currency exchange company and were very grateful for the hand-holding we received during our first couple of money transfers,” says David. “The system was so much simpler than using our high street banks, plus the rates we got were much better.”

The couple also learned that transferring different amounts as stage payments saved them money on the rates too.

“We learned early on that the rates improved as our transfer value increased,” explains David. “Our transfers now are less frequent because we transfer as and when we need funds, and the rate is favourable.”

For those looking to organise a transfer for the first time, trying to compare rates to find the best deal can be a long and disheartening process. The main problem with foreign exchange is that many currency companies don’t publish their real customer dealing rates. Instead they provide a ‘currency converter’ on their website, which many people mistakenly believe shows them the cost of their currency deal.

With only a handful of exceptions, these tools do nothing more than show the ‘interbank’ or wholesale exchange rate, which is the rate that banks deal at between themselves but is not available to individuals. The converters often carry disclaimers about the rate, saying it is only an indication. Generally users then have to contact the company or register with them to get an actual dealing rate at which they can exchange.

Just imagine pulling into the petrol station forecourt to find that the sign gives you the price of a barrel of crude oil, rather than the price you are actually going to pay for a litre of fuel. Drivers would be outraged but this is exactly what is happening in foreign exchange.

The reason this pricing is so difficult to pin down is that currency companies charge different prices to different customers. The factors that dictate what margin a customer is charged for a particular deal may sometimes be related to market movements, but are more commonly based on the perceived value of a particular customer – as well as their negotiating skills.

It’s unfair that customers who are less able to take on a commission-based dealer, or who don’t understand the foreign exchange market so well, or who may not be looking to arrange multiple exchange deals, are charged more than others. This wouldn’t happen if you were buying anything else.

Customers should be able to shop around and compare the cost of doing the deal with a number of different providers, but the current lack of clarity over rates by currency companies makes this impossible. Any comparison sites that exist show only ‘indicative’ rates which don’t mean anything in practical terms.

Frustrated by this lack of pricing transparency, we decided to set up currencyratescompared.com. This highlights which providers publish their customer dealing prices for transferring from pounds to euros. We are also lobbying government ministers to change the way that foreign exchange services are sold to the public, and are running a petition calling for all specialist foreign exchange providers to make their customer dealing rates available on a price comparison site approved by the Financial Conduct Authority (FCA).

In the meantime, make sure you shop around for the best rates and, most importantly, ensure that what you see is what you actually get.

As for the Tattums, they are now looking forward to many happy years in their new home. “We ended up with a wonderful house on a massive piece of land set among beautiful countryside with magnificent views. We love it here. The summers are long and the winters very short, and the lifestyle is very laid back,” says David.

“We are very proud of what we have achieved in such a relatively short time. The fact that we did our homework on those early money transfers meant that our money went much further.”

Helen Scott is managing director of Eris FXTel: 0203 771 1593