FOREIGN EXCHANGE
only regulated as ‘Money Service Businesses’ by HMRC. However, by May 2011 currency brokers will need to be registered under the Financial Services Authority. Many of them already have the application process in hand. Chris Saint says, “While regulation is soft right now, it’s going to become much more full-on in future. That may mean some smaller companies will fall by the wayside.” He advises agents to “make sure you go with a trusted name.” It’s a competitive market, with a huge
number of smaller brokers as well as a number of larger companies. Estate agents looking to find a partner are spoilt for choice. However, finding the right broker is tricky. Patrick Joseph says he tried a number of brokers before settling with Foremost Currency Group. “It’s all about service,” he says. “You need
Money makes the world go around... and up and down, so don’t lose out on the exchange
paid for their referrals, so adding foreign currency to the range of services offered can create a new revenue stream. Even though most of Hargreaves
Lansdown’s clients for the service come to them directly, the company operates an affiliate scheme too. “It’s a new revenue stream for the agent,” Chris Saint says, “and there’s no cost to the client for it, as the agent’s referral fee comes out of our normal commission.” He says a ballpark figure for commission would be around 20 per cent of Hargreaves Lansdown’s revenue stream; that varies depending on the volume of business being referred by the agent. And he points out that monthly mortgage payments and other regular bank transfers continue to carry a referral fee, creating a recurring revenue stream for agents. Adam Bobroff says agents should be
clear about the basis for the calculation of their commission. “There are two routes to go down, either a percentage of the brokerage that we make or a percentage of the volume that is traded,” he says. But he adds that while the additional income can be material, “the extra revenue is not the be all and end all” for his partners, it’s the ability to make their clients’ transactions simpler, and create customer loyalty, that is their main motivation. Foremost Currency has even launched a property portal, listings on which are available free to its partners. Vasilios Dimarakis is well aware of the
strategic place of the currency offering for 40 NOVEMBER 2010 PROPERTYdrum
some of his partners; Moneycorp provides co-branded literature to some of its agents in order to increase client loyalty. “Our service provides some income,” he says, “but customer loyalty and the benefit of a one stop shop are more important in the long term.”
ReGulAtiOn AnD ReCOMMenDAtiOn Where large amounts of money are concerned, of course, agents need to be careful that none of it is going to go astray. Regulation is a weak point in this sector, as until recently, currency businesses were
to know that if you pick up the phone, there’s some one there. I don’t work with ten different brokers, I work with one.” Only experience can tell you if you’ve made the right decision, and he advises agents to be prepared to change their arrangements if things are not working well. David Johnson advises agents to ask
around to find out which brokers have a good track record in the sector. He says it’s obvious that this is the route many estate agents take when they come to Halo Financial; “the business we get is almost all referral business, and the largest part of our growth has been through word of mouth.” But perhaps the best way for agents to
choose a broker is to ask their own clients. If a client has had a good experience with the forex broker they used for their house purchase, it’s worth getting in touch to see if the currency house has a referral scheme. David Johnson says this is something that works very well for Halo in winning new business; “it reverse markets itself!” Of course estate agents are involved in
Apart from helping agents’ clients get a better rate, a lot of what we’re about is market expertise
and knowledge.” ADAM BOBROFF FOReMOst CuRRenCy GROup
selling property, and the currency aspects of the transaction, while important, will remain secondary. But the currency volatility of the past couple of years – and in particular sterling’s weakness against the euro – has raised buyers’ awareness of the foreign exchange issue as a part of their property purchase decision. Agents who can proactively help their clients to make the most of their sterling resources are likely to be rewarded – and not just by making a percentage on the deal.
Add your own opinions to the debate:
www.propertydrum.com/articles/forexnov
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