More than 8 in 10 people feel ‘tricked’ or ‘taken advantage ‘of by banks allegedly charging hidden fees in foreign exchange transactions, according to research from TransferWise, the international money transfer platform.
The report, conducted by Opinium, investigated how UK consumers view foreign exchange services, with emphasis on ‘0% commission’ and ‘free’ money transfer tactics.
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The overwhelming majority of respondents, some 85%, said they underestimated or were unaware of the full cost of sending money abroad.
Taavet Hinrikus, co-founder of TransferWise said: "It’s deeply unfair for banks to advertise foreign exchange as free to consumers when in fact they just hide their fee in the mark-up they add to the exchange rate.
"Customers just want to know what they’re getting – surely that’s not too much to ask? That’s why we are asking the Government to deliver on its pledge to stop misleading pricing in foreign exchange before 2016."
In the run up to the General Election, the Conservative party announced plans to improve transparency to charges and fees associated with foreign exchange in a manner which the customer understands.
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By GlobalDataOpposition to the Government and supporter of greater FX transparency, Chi Onwurah Labour MP, welcomed TransferWises’ campaign "Stop Hidden Charges" when it launched in November 2014.
Onwurah said at the time: "After the Libor and forex scandals, public confidence in foreign exchange transactions is at an all time low. So I welcome TransferWise’s campaign for greater transparency.
Presently commercial foreign exchange companies in the UK are either treated as Money Service Businesses and are subject to regulations imposed by HM Revenue and Customs, or supervised by the Financial Conduct Authority.
A further 86% of the TransferWise respondents wanted the government to play a bigger part in preventing misleading pricing from the financial sector, while 28% said they were ‘unsurprised’ to learn if banks hide foreign exchange fees.
In June 2015, during the annual Mansion House speech, the Chancellor of the Exchequer George Osborne reiterated the Government’s intention to clean up the UK’s foreign exchange market and deliver a ‘world-class standard of competition and conduct’.
TransferWise research findings include:
– Nearly half (45%) said they’d consider changing banks if another bank committed to being totally transparent in its pricing;
– 83% of people felt that it would be unfair if their bank didn’t inform them of all the costs involved to use one of their financial services;
– Nearly a quarter (23%) of people were angry about being charged hidden fees by their banks, and
– Two-thirds (66%) said they would feel happy or delighted if they could avoid hidden costs when sending money abroad; while another 43% would be relieved or grateful
