Some Currency Charges To Be Scrapped

Banks have been told to make their charges on foreign currency conversion clear and even scrap some charges altogether after a "super-complaint" from a consumer rights group.

The Office of Fair Trading (OFT), which investigated the complaint from the group, Consumer Focus, said it had secured agreement from banks and travel money providers to "significantly improve" the information available for consumers purchasing foreign currency in the UK or using credit and debit cards abroad.

A "raft" of commitments had been made by banks and other providers after the OFT investigation, including agreement from Lloyds/HBOS, Barclays, RBS/Natwest, Santander and the Co-operative Bank to scrap charges for consumers using their debit cards to purchase foreign currency in the UK, which typically is between 1.5 and 2% of the amount being purchased.

Other measures include agreement from most banks and lenders to clearly display the cost of conversion. Meanwhile, many foreign currency businesses have agreed to review their marketing to make the various costs and conditions that apply clearer, particularly those applicable to '0% commission' deals.

The OFT's report found that, in 2010, people spent around £32 billion abroad, of which £27 billion was while on holiday, using both their debit and credit cards and foreign currency bought in the UK, resulting in an estimated revenue of £1.1 billion for travel money providers active in the UK.

OFT Chief Executive John Fingleton said: "Companies should be earning profits by competing to provide the best value products and services, not through charges that are hard for customers to identify or interpret.

"We are very pleased that the travel money industry has agreed, following a OFT short investigation, to make these significant voluntary changes. We believe they will reduce confusion about the charges that apply when buying travel money in the UK or using cards overseas, and hope they will allow holidaymakers to be far better informed when making choices about how they spend abroad. This should drive greater competition in the UK travel money market."

(DW)