An Alternative to Using the Banks for Foreign Currency Exchange Transfers

For a long time the banks have enjoyed a near monopoly on foreign exchange transactions in and out of Australia, at least as far as individual expatriates were concerned.  However, there now exists an alternative in the form of Ozforex, an Australian company holding an Australian Financial Services Licence (No. 226484), to deal and give advice in foreign exchange.

Australian regulations require licensed foreign exchange dealers to meet strict capital requirements and employ a range of internal procedures covering; risk management, staff training, accounting and audit to name a few. These requirements were introduced in 2001 to enhance consumer protection and it goes without saying that you should only transact with a licensed dealer.

The company provides an immense amount of data and information on forex through its website: Ozforex.com.au, offers lower or no fees compared to its banking rivals and effectively gives an individual access to the much more competitive corporate rates.  The table below demonstrates the scale of savings that can be made on a transfer of a relatively large sum from the UK to Australia, and even greater savings on bank charges are available where larger sums are involved and the transfer can be individually managed and negotiated. This is an example only, and intended to demonstrate the savings that can be generated through proper management of your forex transfers - it pays to shop around!

Example : Potential savings made on a transfer to Australia from the UK using OzForex vs. a Bank
 

Even if you are not in a position to use a company like Ozforex because of your location or other considerations, you should compare your alternative means of transferring money, and the costs, using something like the above table.  It is particularly important to manage your transfers cost effectively when making large transfers - perhaps from the sale of a house in the UK - into Australia. Even the "migration" forex rates that some banks offer are not necessarily that attractive or costs effective - it will pay to make comparisons between the providers.

The table below lists the currencies that you can both buy and sell through Ozforex:

The Problem with Foreign Currency Cheques

For their own reasons, it is quite common for overseas companies to send cheques quoted in a foreign currency to Australian expatriates (and others) who have returned to residency in Australia - these often include investment payouts or pension transfer. Cheques are not just an inconvenient means of transferring money, because it may take weeks for local banks to clear them, but they are costly because the exchange rate provided on cheques is normally even less competitive than you would receive on a telegraphic transfer.

If you have a choice, you should normally choose a telegraphic transfer. If you have no choice, and the cheque value is fairly large, then consider establishing a foreign currency account at your Australian bank and paying the cheque directly into that account. This gives you the opportunity to have the forex transaction done by someone other than the bank, such as Ozforex, and for you to choose the most appropriate time for the forex conversion to actually occur.

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