Angry customers of Crown Currency Exchange are calling for tighter regulation of the exchange industry after the firm collapsed last month with debts of £25m.

Many small payment institutions cannot guarantee client funds

The company was offering "impossible" exchange rates to customers who paid six months in advance for their currency.

But Crown was using this money to pay off existing debts and gambling on future rates of exchange.

To cover the new debts, the firm needed to attract more customers with even better deals.

When the extent of Crown’s debts came to light, Barclays froze the company's accounts.

Some 13,000 customers are estimated to have lost money with Crown, including families who had booked holidays and investors buying property abroad who handed over their life savings.

Many believed their money was safe, as Crown was registered with the Financial Services Authority (FSA) but crucially, the firm was not regulated by the FSA.

This was because it turned over less than 3m euros (£2.6m) a month.

Under FSA rules, such firms are considered small payment institutions and therefore not required to keep client funds safe.

Financial experts had warned for months that Crown’s exchange rates were simply too good to be true.