Two foreign exchange firms have been accused of turning the screw on struggling retailers by abruptly changing the terms of currency cover after dramatic fluctuations in sterling.
The Original Factory Shop, a discount chain with 168 stores and 2,450 employees, is complaining to the Financial Conduct Authority after Ebury Partners and Global Reach Group altered the terms of their currency hedging contracts.
The retailer, which sells toys, small electrical appliances and garden equipment, imports a significant amount of stock and had two forward currency contracts worth about $16.5 million with the two forex firms.
Such contracts are supposed to give businesses protection from currency movements, which can erode profit margins. The retailer said that its contracts, which were taken when sterling was worth $1.30, have
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