The Times

MOVING to Spain? Imagine saving a four-figure sum on costs before you even set foot in your dream home on the Costa de la Luz.

That is the prospect held out by the myriad money brokers who have sprung up in recent years to service the hordes of British people emigrating from these frostbitten shores.

The sales pitch is enticing. Specialist providers can obtain the keenest rates while providing a bespoke service. James Hickman, of Caxton FX, the broker, says: “The difference between ourselves and the banks is the rate we offer. The banks essentially take a larger margin. If you were to go to your bank and ask to transfer £50,000 for a deposit on a property, it would generally quote you a tourist rate.”

He suggests that the saving could be as much as £4,000 on a £150,000 transfer. My attempts to test this claim, however, led to the realisation that nailing the proverbial jelly to a wall would be more easily achieved.

The problem is that foreign exchange rates move quickly. A rather unscientific sample of rates for transferring £50,000 into euros gave results that varied between €1.469 from HIFX and €1.456 from Travelex — a difference of nearly £450 for transferring £50,000.

The problem of nailing down rates is recognised by Steven Hatton, of FX Auctions, a firm that matches buyers of foreign exchange direct with sellers. He says that the rates on many specialist brokers’ websites are so-called “interbank” rates, the level at which big banks deal. This is not necessarily the price at which a deal would be done for a client, he claims.

Whatever the saving, it may still be worth using a specialist firm that has a greater interest in giving you a tailored service. For instance, while a firm such as HIFX sets a £5,000 minimum for one-off lump sums, it will deal with as little as £400 if it is part of a series of regular payments.

You can fix the exchange rate for up to two years ahead. Mark Bodega, HIFX’s marketing director, says: “This is ideal for a pension or salary that you receive every month.”

This can save you bank commission, which may be as much as 2 per cent, Mr Bodega says, not to mention the bank receiving fees at the other end. There is also the matter of speed and customer service. Moneycorp claims that, for deals completed before 2pm, it can transfer money to Europe the same day. Apart from the buy-sell spread, its only charge will be a £15 transfer fee.

Nick Bull, of MoneyCorp, says: “We will send the funds to a bank account specified by the client making the transaction. This is not necessarily their own. Quite often we will pay into a lawyer’s account to settle payments to be made to an estate agent or a seller (of a property).”

Caxton FX also aims to make transfers within a day, claiming a 90 per cent success rate, while levying no extra charges. Currencies Direct works on a 48-hour cycle, it says, but cautions that it can sometimes be difficult to avoid receiving-bank fees of anything between 0.3 per cent and 0.6 per cent.

Similar service from banks can involve extra fees. Barclays, for instance, charges £35 for guaranteed next-day transfers and says that there may be a receiving-bank charge at the other end, which in Spain is typically 0.15 per cent. Royal Bank of Scotland will charge £25 for same-day service, with a Spanish receiving-bank charge of £40.

However, using a bank can give peace of mind. Apart from money-laundering checks, international money transmission remains unregulated.

None of the new companies comes close in financial standing to the banks. Finbarr O’Connell, an insolvency specialist at KPMG, the accountant, says that he would demand to see a letter from a firm’s own bank. “I would ask whether there was a separate bank account for each client,” he says. “If there was a pooled account, the letter would need to show that the sub-sections of that account are kept in credit at all times.”

Adrian Deazle, 39, used Caxton FX last summer to transfer $89,000 (£50,815) as a deposit on a holiday home in Orlando, Florida. “It saved me $1,000 compared with the banks,” he says.