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Last Updated: Saturday, 8 September 2007, 14:20 GMT 15:20 UK
Agents bid to buy First Solution
By Bob Howard
BBC Radio 4's Money Box

Poster advertising money transfer services
UK money transfer businesses handle up to 3 billion per year.
Agents who worked with the collapsed money transfer business First Solution are in talks with the Official Receiver to buy the business.

The company closed its doors in June owing an estimated 1.7 million to two thousand customers.

First Solution is currently in provisional liquidation and the Companies Investigation Branch is looking into the reason for its collapse. The agents say if they are successful they will try to offer some compensation.

First Solution promised to send customers cash home to relatives in Bangladesh, in exchange for a fee.

First Solution's customers

Many First Solution customers were restaurant staff on low wages who sent a few hundred pounds each year to their family.

The company said it had a hundred and twenty thousand customers in the UK and transferred eighty seven million pounds last year.

I gave First Solution 70,200. They promised to pay in Bangladesh in five days but they didn't.
First Solution Customer

Azmel Hussein owns a Brick Lane restaurant and has set up a support group for customers who have lost money.

He told Radio 4's Money Box programme that First Solution's collapse is being keenly felt in Bangladesh.

"Bangladeshis have the lowest income in the whole of the UK: for them this is big money - this is very bad for Bangladesh."

Some First Solution customers lost a lot more.

One customer ordered a transfer of 70 000 to his family in Bangladesh to build a house. But a week after he gave the instruction, on the 28th June, his local First Solution office closed down.

"I gave First Solution 70,200: 70,000 to send to Bangladesh and 200 their fee.

"They promised to pay in Bangladesh in five days but they didn't."

It is estimated the UK's money transfer businesses handle up to three billion pounds a year.

It will be 2009 before the regulatory framework will be in place."
Stephen Timms, minister responsible for Corporate Governance

First Solution was one of hundreds serving the UK's ethnic communities.

The directors of First Solution have blamed the shortfall on some of their agents extending credit, and exchange rate fluctuations.

It was registered with Customs and Excise to conform with anti-money laundering legislation but money transfer businesses are not licensed by the government.

Regulation

Nor are they regulated by the Financial Services Authority.

Stephen Timms, minister responsible for Corporate Governance, told the BBC that the money transfer businesses will be regulated in the future.

"It has now been agreed that this sector does need to be regulated and the Treasury will therefore be issuing a consultation in the autumn.

"It will be 2009 before the regulatory framework will be in place."

Mr Timms said he sympathized with those who had lost money but the Government would not be offering them financial help because First Solution was a private company.

He urged customers to choose which companies they use to transfer their money carefully, and not simply to choose the cheapest.

A charity fund managed by the Sir William Beveridge Foundation to help people who lost money has now been closed, having received just one donation of 100.

A fund spokesman say the money is being returned to the donor.

BBC Radio 4's Money Box was broadcast on Saturday, 8 September 2007 at 1204 GMT.

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