Crown Currency Exchange

Debate between Tessa Munt and Michael McCann

Tuesday 7th December 2010 Commons Chamber

[Tessa Munt (Wells) (LD)]

Thank you, Mr. Speaker. I particularly thank the Minister for attending this evening to reply to this debate on the failure of Crown Currency Exchange. This is a matter that particularly concerns my constituents, Nick and Larissa Fry from Axbridge, and I also speak on behalf of a retired bank manager from Holcombe in the neighbouring constituency of the Deputy Leader of the House, my hon. Friend the Member for Somerton and Frome (Mr Heath).

The problem as far as I understand it is that companies such as Crown Currency Exchange are registered with the Financial Services Authority, but the legislation governing its activities looks at the size of the company, not at what it is doing. Crown Currency Exchange appears to have been behaving a bit like a high street bank or foreign currency exchange, and was registered as a small payments institution. As I understand it, it was meant to operate under an average of €3 million a month, but it appears from the administrator’s report that for the last 10 months the trading average was at about €10 million a month.

The legislation appears to exclude 547 small payments institutions in particular, from all of the many thousands of companies that are registered with the FSA. I want particularly to draw the House’s attention to the FSA website, which states that the FSA’s general duties

“in so far as reasonably possible”

are that it should provide

“market confidence, public awareness, protection of consumers and a reduction of financial crime.”

It appears that in this particular case it has failed on all four counts. The FSA also says that it is

“the regulator of all providers of financial services in the UK”,

and for that reason alone it is within certainly a retired bank manager’s understanding, my original understanding and the understanding of most people that these companies are in some way controlled by the FSA.

Crown Currency Exchange displayed on its website, besides the FSA logo, that of Her Majesty’s Revenue and Customs, which was clearly for money-laundering purposes. People are therefore entitled to feel that there should have been some sort of cover for the activities that that company undertook.

[Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)]

A number of my constituents who have been involved with CCE have also contacted me. Is it not equally despicable that the company sought to suggest that the lucrative exchange rates for the US dollar that it was actively advertising were the result of orders that had been cancelled, which allowed it to offer these fabulous terms, when in actual fact it had no currency, and it simply wanted to bring cash flow in to continue trading? Is that not a major concern that should have been picked up by the FSA?

[Tessa Munt]

That is quite correct. It certainly seems that on several occasions a number of people brought these problems to the attention of the FSA. One of whom was Robin Haynes, the managing director of Currency Index Ltd. He raised concerns about Crown Currency Exchange with the FSA in March 2009 and September 2010. He raised his concerns with HMRC in September 2010 and with Barclays, Crown Currency Exchange’s bankers, in May 2009. None of those appears to have been acted on.

There is also the case of a whistleblower who reported his concerns to the companies investigations branch of the Insolvency Service on 20 August 2009, but again nothing appeared to happen. It seems that none of those bodies is able to investigate a company until it has done something completely awful to its customers.