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Crown Currency customers failed by the FSA

By Stephen Womack

5 December 2010

Reader comments (5)

The Financial Services Authority is under growing pressure over the way it monitored failed foreign exchange business Crown Currency. The company collapsed at the start of October, leaving more than 11,000 customers who had ordered currency in advance waiting for payments totalling £20m. But Crown, based in Hayle, Cornwall, had only £3m to £4m of assets.

Broken dream: Pete Blake lost £24,000 set aside for a new home.

Although it had been registered with the FSA since November last year and was able to display the regulator's logo on its website, there are now big questions over whether it met the right conditions to merit a regulatory 'light touch' (see below).

Tessa Munt, Liberal Democrat MP for Wells, Somerset, has taken up the cause of Crown victims. She is trying to arrange a meeting between customer representatives and Treasury Minister Mark Hoban.

Munt, who attended the formal creditors' meeting last week, says: 'What galls people is that there seems to have been a failure on the part of the FSA to keep its eye on the ball. It is desperately unfair that people were taken in by the FSA logo on the company's website when the business was not properly regulated.'

Many Crown customers were buying holiday money in advance, suffering losses ranging from £200 to £2,000. But others have seen far higher losses as a result of using the firm's competitive exchange rates to book currency to purchase properties abroad.

Jo Struyk, chairwoman of the Crown Currency Action Group that has about 2,000 members, says: 'We know of one customer who has lost more than £400,000.'

Financial Mail first warned about Crown in October last year. After our report, Manchester United football club dropped the firm as its travel money partner.

Last week's meeting in Birmingham heard new evidence of the cavalier way the company was run by its two shareholders and directors, Peter Benstead, 68, and Edward James, 70.

Crown did not keep full accounts, nor did it maintain segregated bank accounts to keep the money of the company separate from customers' cash. Administrators Paul Clark, of MCR, and Harold Sorsky, of SPW, said Crown could have been trading insolvently for up to two years before the collapse.

Clark said: 'I would suggest the November 2009 accounts were not a fair reflection of the company's trading position... and we suspect that could be the case for previous accounts too.'

The administrators are investigating £1.8m of suspicious transactions in the run-up to the collapse. These include a loan of almost £500,000 to Mayfair and Grant, a postal goldbuying business also run by Benstead and James that went into administration on November 2.

Pete Blake, 62, has seen his retirement dreams soured after losing £24,000 with Crown. His cheque to the firm was cashed on September 28, just days before the administration.

Pete, who has worked all over the world as a lead and zinc miner, says: 'The money was about one-third of my retirement savings and was to be used to build a cottage in Ireland to retire to with my partner. Now we've had to borrow that sum to make sure the work gets done.

'I'm fully resigned to the loss and I'm not really interested in getting a modest dividend of 10p in the pound back from Crown. The remaining assets of Crown are better spent looking into whether there are grounds to prosecute the directors.' Devon & Cornwall Police has already begun an investigation into Crown.

http://www.thisismoney.co.uk/bargains-and-rip-offs/travel/article.html?in_article_id=519339&in_page_id=1093&ct=5

What a pile of crap the FSA really is.

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Big wow.

If you care about this, what about the people who lost masses of their pensions savings in the Equitable Life scandal? That's still not been sorted and I was told it's essential to pay into a pension in your early years. So like a brain dead moron, I bought the hype and the FSA seal of approval and lost out.

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Big wow.

If you care about this, what about the people who lost masses of their pensions savings in the Equitable Life scandal? That's still not been sorted and I was told it's essential to pay into a pension in your early years. So like a brain dead moron, I bought the hype and the FSA seal of approval and lost out.

I've quoted an article dated today.

Sorry I haven't time to list every historical FSA debacle but just for you here's this

FSA is accused of maladministration over collapse of Equitable Life:

http://www.independent.co.uk/news/business/news/fsa-is-accused-of-maladministration-over-collapse-of-equitable-life-869814.html

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I've quoted an article dated today.

Sorry I haven't time to list every historical FSA debacle but just for you here's this

FSA is accused of maladministration over collapse of Equitable Life:

http://www.independent.co.uk/news/business/news/fsa-is-accused-of-maladministration-over-collapse-of-equitable-life-869814.html

It wasn't a pop at you. More the whole FSA debacle. Thre Equitable Life is still as sore point as they still haven't done anything about the incompetence, and then it happens again, and again and again! Bloomin infuriating. What is the point of the FSA? Maybe someone should sum up the costs of all the losses that they were supposed to govern over and eliminate.

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I admit I don't know, so tell me.

The point is to give an appearance of doing something. I've dealt with the FSA a fair bit and all I've ever seen them do is give legitimate firms a hard time over trivialities whilst missing pretty much everything done by the rogue ones.

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The point is to give an appearance of doing something. I've dealt with the FSA a fair bit and all I've ever seen them do is give legitimate firms a hard time over trivialities whilst missing pretty much everything done by the rogue ones.

Somehow that doesn't surprise me.

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The point is to give an appearance of doing something. I've dealt with the FSA a fair bit and all I've ever seen them do is give legitimate firms a hard time over trivialities whilst missing pretty much everything done by the rogue ones.

All regulatory agencies develop the same tropism- it's so much easier to target those who play by the rules than those who evade them-so they end up being little more than encumbrances to legitimate operators and probably encourage evasion simply to avoid the hassle of compliance.

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It wasn't a pop at you. More the whole FSA debacle. Thre Equitable Life is still as sore point as they still haven't done anything about the incompetence, and then it happens again, and again and again! Bloomin infuriating. What is the point of the FSA? Maybe someone should sum up the costs of all the losses that they were supposed to govern over and eliminate.

Surely the only time you hear about the FSA is when something goes wrong - you do not hear about all the things that go right. OK, the near collapse of the world's banking system was a pretty big c0ck up, but there are thousands of licensed firms out there and keeping an eye on every one is hard.

In this case, it looks as though client money has been mixed with firm money. This should have been identified by the auditors and picked up upon. It would appear that they did not, so the auditors may be liable for their negligence.

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The point is to give an appearance of doing something. I've dealt with the FSA a fair bit and all I've ever seen them do is give legitimate firms a hard time over trivialities whilst missing pretty much everything done by the rogue ones.

+1

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Big wow.

If you care about this, what about the people who lost masses of their pensions savings in the Equitable Life scandal? That's still not been sorted and I was told it's essential to pay into a pension in your early years. So like a brain dead moron, I bought the hype and the FSA seal of approval and lost out.

I thought you morons were in line for a massive taxpayer handout? Despite keeping their winnings if things go well, morons who lose always want to dip their fingers into OUR pockets.

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Apparently being registered by the FSA doesn't always mean being regulated by the FSA.

Police have arrested two men in connection with the collapsed foreign exchange firm Crown Currency Exchange.

Crown Currency offered premiums to customers who paid six months in advance

The men, aged 68 and 70, were arrested by Devon and Cornwall Police and are awaiting interview.

Detective Inspector Bean from the Serious and Organised Crime Branch said: "It is expected that this will be a protracted enquiry that may take many months.

"It is anticipated that there are approximately 13,000 victims.

"Devon and Cornwall Police are liaising with both MCR, the administrators responsible for the affairs of CCE and The Crown Currency Action Group in order to obtain contact details of these victims."

Crown Currency Exchange collapsed on October 4, owing £25m in debts.

More than 13,000 people lost money held with the firm, including those who had booked holidays or invested in properties abroad with their entire life savings.

Many were surprised to discover the company was not regulated by the Financial Services Authority, despite being registered, as it turned over less than the threshold £2.5m a month.

Under FSA rules, such firms are considered small payment institutions and therefore not required to keep client funds safe

http://news.sky.com/skynews/Home/Business/Two-Arrested-For-Crown-Currency-Collapse/Article/201012115849407?lpos=Business_Second_Buisness_Article_Teaser_Region____4&lid=ARTICLE_15849407_Two_Arrested_For_Crown_Currency_Collapse

There must be lots of firms with a turnover of less than £2.5m a month where people think their money is safe!

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They were offering better rates than the worlds biggest currency traders were getting, nobody could beat them on price. I stuck with ING when Icesave were offering >100 points more

Landsbanki's creditors include more than 100 UK councils which placed a total £900m with Icesave

If people want to take risks for a higher return they deserve to lose their money, a boring properly run bank with big reserves will charge you more than cost for foreign currency, offer a realistic

low return for 0% risk/ instant access and won't double your money in 12 months.

Someone wants below cost currency exchange including delivery then they are gambling.

Madoff ran a ponzi scheme of more than $65 Billion, Icesave/landbanski had 300,000 UK mugs who desposited $5 Billion for 6%! return no questions asked.

Ignorance is no excuse for not taking care of your hard earned money.

Edited by northwestsmith2

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I would like to see the law changed so that any limited company that take money from individuals for investment purposes, has the directors personally liable for any losses, and to make that duty uninsurable.

That way if a company loses people's money, the directors have to pay themselves. I would like to see this liability include all assets, including that of their spouses, and any pensions.

Do that, and I think that we would see a lot less of this going on. It is pretty obvious to anyone that looks at this that crooks are using limitied liability laws, and the knowledge that fraud is rarely prosecuted, and that there are no prison slots, even if they were to get a derisory sentence, as a way of making money.

It may not help get felons into prison, but it would be a great way of ensuring that crooks cannot profit from their evil endeavours.

Make directors of companies who take other people's money liable for the losses!

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