Foreign Exchange Rip Off

Gordp · #1 (**permalink**) 06-08-2007, 01:06 PM

I have beeing trading stock in my RRSP account and recently found the Bank had entirely misrepresented Forex charges.

I purchased 1000 shares of a stock at $30.00 when the stock reached 32.00 I sold it. For what I thought was a tidy profit, less of course the cost of the trade.

Not so. I was charged the $23 purchase and $23 sell fees as well as Forex fees of Approx $1600.

So my net on the $2000 profit was about $350. The balance was kept by the bank for fees.

What a rip off! Since when does it cost $800 to buy $30,000 US dollars and another $800 to sell it. The effort would seem the same if it were $8.00 or $8,000.00.

What is even more infuriating is that the very next day I was charged the same again to purchase another US stock.

To net this out over the past 5 years I calculate I have been charged by my bank tens of thousands of dollars in Forex fees to change my money back and forth often the very same or very next day.

I have written the bank countless times. Their only offer was to help explain to me that that is how it works! When I closed my account and moved my business the sent me a bill for $100 admin fee. Nice touch!

What is wrong with Big banks in Canada? They have to rip off their small customers to increase the outrageous profits.

When will the government step up an protect the small investor trying to put their retirement money to work!

Gordp · #2 (**permalink**) 06-08-2007, 01:09 PM

I have beeing trading stock in my RRSP account and recently found the Bank had entirely misrepresented Forex charges.

I purchased 1000 shares of a stock at $30.00 when the stock reached 32.00 I sold it. For what I thought was a tidy profit, less of course the cost of the trade.

Not so. I was charged the $23 purchase and $23 sell fees as well as Forex fees of Approx $1600.

So my net on the $2000 profit was about $350. The balance was kept by the bank for fees.

What a rip off! Since when does it cost $800 to buy $30,000 US dollars and another $800 to sell it. The effort would seem the same if it were $8.00 or $8,000.00.

What is even more infuriating is that the very next day I was charged the same again to purchase another US stock.

To net this out over the past 5 years I calculate I have been charged by my bank tens of thousands of dollars in Forex fees to change my money back and forth often the very same or very next day.

I have written the bank countless times. Their only offer was to help explain to me that that is how it works! When I closed my account and moved my business the sent me a bill for $100 admin fee. Nice touch!

What is wrong with Big banks in Canada? They have to rip off their small customers to increase the outrageous profits.

When will the government step up an protect the small investor trying to put their retirement money to work!

Dru · #3 (**permalink**) 06-09-2007, 12:32 AM

As you have learned, knowing the rules of the game is very important to winning. I'll bet the next investment you enter, you will be more savvy and ask those questions up front.

Take on the responsibility yourself to learn how to play the game. If you get the government involved (more than they already are) chances are they will just muck it up.

brian · #4 (**permalink**) 06-13-2007, 11:56 AM

Sorry to hear about your experiences, and definitely underlines the need for every investor to have a clear idea of the fees relating to their investment purchases, and the most efficient ways to manage it. Of course, there are also taxes to pay which haven't even been factored into the above.

I think the reason for the whole situation is that some companies are able to offer a more efficient service - dealing with brokerages more directly should help cut down on fees, as opposed to a bank which is commonly going to include a whole range of different fees.

Hopefully you'll have better luck elsewhere.

Mark A · #5 (**permalink**) 06-18-2007, 11:50 PM

Gordp, are there any updates to your situation? A new broker perhaps?

Mynion · #6 (**permalink**) 06-21-2007, 12:58 AM

I agree with the above posts. You have to study the rules of the game before you can implement a winning strategy. Unfortunately, there are tons of fees and various charges involved with investing, and most of the time they are hidden. Variable annuities come to mind (nothing against variable annuities, you just have to know what you are getting into).

You can ask to find out more about how the stated charges are calculated. This goes back to knowing the rules.

In fact, if you are trading on the dollar, variable annuities used to be the best way to do this. You'd simply trade in and out of a strict International fund and money market, based on movement of the dollar. You could place these trades at no cost inside the annuity. However, most variable annuity companies now restrict or prevent frequent trading, so the strategy doesn't really work anymore. But I know about 20 people who made hundreds of thousands of dollars doing this.

Gordp · #7 (**permalink**) 06-21-2007, 04:02 PM

Quote:

Originally Posted by Mark A

Gordp, are there any updates to your situation? A new broker perhaps?

No updates. Wrote the Banks Ombudsman, no response. Wrote the Ontario Securities Exchange Ombudsman, no response.

I was reading a globe and mail article recently about a class action lawsuit against another firm (RBC) and was thinking if this is the only way to get the big banks and their brokerages to take note perhaps it's time to start a similar action.

Apparently this very issue was the center of a major investigation and government move to force the brokerages to allow Canadians to hold US funds in their RRSP's. What was reported was that even though it was demanded by the goverment, none of the Canadian Banks Brokerages actually complied due to complexity/cost of implementation.

So in the meantime the Canadian investor is being ripped off by the big Banks who don't want to invest in systems to track US dollars and instead drag their feet and make huge profits exchanging our dollars back and forth from Canadian to US funds.

Mark A · #8 (**permalink**) 06-21-2007, 05:09 PM

Wow, so the banks in Canada are blatantly ignoring the law? Sounds like there's lawsuit money to be had.

Mynion · #9 (**permalink**) 06-21-2007, 11:43 PM

This definitely sounds like a lawsuit waiting to happen. In fact, several lawsuits.

What a mess!

Chris

Easy To Get Credit Cards · #10 (**permalink**) 11-05-2007, 09:32 AM

Hello,

If you are trading Forex than every broker gets a PIP spread right out of the gate usually about 3-5 on the USD/CAN and USD/EUR and the other majors.
So, if you are doing the trading yourself and NOT the broker you can make real good money doing it. If you want more practice get a virtual practice account with OANDA and they will get you up with $100,000 account to play with on the live market.
Cheers!

deelip · #11 (**permalink**) 12-07-2007, 02:11 PM

May be the rule is different in other banks.
Did you try that?

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