London's Leading Fintech Companies Unite to Demand Urgent Review of Hidden Bank Fees for International Payments.
A coalition of fifteen prominent fintech companies in London, including Wise, Revolut, and Monzo, has joined forces to call for a comprehensive review of legislation concerning concealed bank fees for international payments.
In an open letter addressed to Chancellor Jeremy Hunt, the signatories assert that UK consumers and SMEs suffered a collective loss of £5.6 billion in mostly hidden foreign exchange fees during 2022. They claim that existing vague regulations enable major providers to continue profiting from these concealed charges.
The letter highlights a prevalent practice where firms present currency conversion services as having 'zero fees' or '0% commission.' However, the real issue arises when a substantially larger fee is embedded within the exchange rate, ranging from 2.5% to 3.7% over the mid-market rate for transfers to EUR or USD with UK high street banks. Unfortunately, this information is never transparently communicated to the customers.
The fintech coalition urges the Chancellor to address this pressing matter within the ongoing Payment Services Regulation review. Their appeal is backed by a list of five demands:
Consumers and SMEs should be presented with the total cost of currency conversions upfront before making any payments.
The legal definition of a 'currency conversion charge' should explicitly include any mark-up over the mid-market rate.
Companies must use an aggregated mid-market rate issued by an impartial provider (e.g., Bloomberg, Refinitiv, New Change FX) that is approved by the Financial Conduct Authority (FCA) as an official mid-market rate provider.
These rules should apply to global currency conversions to support Global Britain, not solely limited to EU currencies.
The letter also provides guidance on how the Treasury can support the FCA in eliminating ambiguous language, ensuring clear compliance rules for all companies.
Magali Van Bulck, head of Emea policy at Wise, emphasized the urgency of the situation, stating that hidden fees in foreign transactions should not be acceptable in 2023. Concealing additional costs within inflated exchange rates, while labeling them as 'zero fees,' negatively impacts the finances of individuals and businesses across the UK. Van Bulck further stressed that this practice is unacceptable, especially in light of the Consumer Duty, which will take effect at the end of the month, and highlights how some firms fail to provide fair value to customers.