Consumers and SMEs lost £5.6 billion in cross border fees last year: Fintechs demand Chancellor address the problem at source
London, Wednesday 19th July - Today, some of London’s biggest fintech companies and interest groups have come together to demand an urgent review of legislation regarding hidden fees for international payments. Fifteen companies including Wise, Revolut and Monzo have joined forces to urge The Chancellor to eradicate this problem. You can read their letter here.
Research from Wise shows that consumers and SMEs in the UK lost a total of £5.6 billion* in mostly hidden foreign exchange fees in 2022, and current ambiguous legislation allows major providers to keep earning profits through these hidden fees.
The legal definition of a ‘currency conversion charge’ should include any mark-up over the mid-market rate.The total cost of currency conversions needs to be shown up front to consumers and SMEs before they make a payment.Mandate firms to use an aggregated mid-market rate issued by a neutral provider (e.g. Bloomberg, Refinitiv, New Change FX), which is approved by the Financial Conduct Authority (FCA) as an official mid-market rate provider.These rules need to apply to global currency conversions to support Global Britain, and not just to EU currencies.The letter also instructs how the Treasury can support the FCA in removing vague wording, and ensuring all companies are clear on the rules they should abide by.
Hidden fees in foreign transactions simply shouldn’t exist in 2023. Burying additional costs in inflated exchange rates and labelling these as ‘zero fee’ is having a detrimental effect on the finances of people and businesses across the UK. In light of the Consumer Duty coming into force at the end of the month, this is completely unacceptable and a textbook example of how firms are not providing fair value to customers. Not just that, it’s also limiting the UK’s role as a global exporting superpower, by making the movement of money across currencies more expensive than it needs to be. Transparency is absolutely critical to ending these hidden fees, giving everyone who relies on international money the chance to understand just how much they are being charged. More shopping around means more competition means lower costs.Magali Van Bulck, Head of EMEA Policy at Wise
Read the letter here.