Q&A: What the collapse of Crown Currency means for you

Holidaymakers could lose hundreds or thousands of pounds following the collapse of foreign exchange website Crown Currency Exchange.

UPDATE 06/10/10 The administrators have set up a helpline for concerned customers: 0844 826 8659

It’s been one of the biggest foreign currency providers in the country, offering better rates than many of the high street alternatives. But now its accounts have been frozen and administrators called in.

For the estimated 13,000 customers affected, this is a worrying time and many say they risk losing thousands of pounds, having paid for but not received their money.

There have been reports that Crown Currency was still accepting payments as late as last Friday, just before its accounts were frozen at the weekend.

Here’s what you need to know...

Will I receive my money?

If you’ve paid for your cash but not received it yet then the chances are you’ll be caught up by this debacle and almost certainly won’t get your foreign currency.

The administrator MCR states that any future orders due for delivery from October 4 onwards, or any undelivered outstanding orders have been suspended while the books are reviewed.

When will this be resolved?

MCR has warned that working through the accounts and customer claims will take time and that people should not expect a speedy resolution. In fact, it estimates that it could be more than six months to resolve.

It will make contact with customers as soon as it can and will tell them how they can make a claim for their lost money.

Can’t I get a refund?

Unfortunately, now that the company’s accounts have been frozen, customers have become creditors and won’t be able to simply demand a refund. However, when Barclays froze the company's accounts, it says there was a £2million credit balance to protect consumers.

What if I paid with a credit card?

There’s good news if you paid for your currency using a credit card. Under Section 75 of the Consumer Credit Act, your card provider is jointly liable with the supplier in situations like this, as long as you have spent between £100 and £30,000.

That means that you should be able to claim a refund from your credit card provider. Get in touch with them to ask for a claim form as soon as you can.

What if I paid with a debit card?

There is some protection on purchases you make using a debit card, although it is not as clear cut as with a credit card.

Customers who paid using a Maestro card will be unable to claim a refund as it expects them to “stand in line” with the other creditors.

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However, people who paid using a Visa debit card have significantly better protection and can claim under the Visa Debit Chargeback scheme.

Although this isn’t a legal requirement, it is part of the Visa Scheme Rules, which participating banks have agreed to adhere to.

You have 120 days to claim from the moment you become aware of a problem and so you should contact your debit card provider as soon as possible to start your claim.

Don’t be too worried if the first person you speak to hasn’t heard of the Visa Chargeback scheme, it’s not as commonly known as the Section 75 laws for credit cards.

Stay calm and ask to speak to a supervisor who should know how to process your claim.

Aren’t I protected under the Financial Services Compensation Scheme?

Unfortunately, the FSCS scheme doesn’t extend to currency firms, which have very little regulation.

Will my travel insurance cover my loss?

Most travel insurance policies will not cover losses of this kind, but it’s worth checking your small print to see if you can make a claim.

Who can I contact?

If you want to get in touch with the administrators, email: crowncurrencyexchange@mcr.uk.com. However, MCR warns that there is likely to be a delay in replying as it copes with thousands of queries.

Is it ever safe to pay for foreign currency online?

Unfortunately, collapses like this one tend to scare people off ordering their currency online. Many people will prefer to go to a bureau de change where they can hand over their money and immediately receive their foreign currency.

However, the very best foreign currency deals are still to be found on the web, and you can be confident shopping with the larger providers.

For example, prepaid card provider Caxton FX deposits all cardholders’ money with the Newcastle Building Society, which is regulated by the Financial Services Authority.

That means customers’ money is safe in the unlikely event that Caxton runs into financial difficulties.

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