According to watchdog Consumer Focus, currency exchange has become too costly for UK travelers, due to complicated charges and information that could be misleading. The group believes that the approximately £1 billion per year total that is charged in fees for currency exchange might not be completely appropriate.
Billions of Charges
Around £27 billion was spend in overseas travel in 2009. The watchdog has complained to the Office of Fair Trading (OFT), but banks are concerned that Consumer Focus had not spoken to banks first.
The complaint suggests that a conversion of £500 into euros could cost one provider £10 and another £30, with no difference between the two services. Overseas charges on credit or debit cards have also been a subject of concern, with complicated charges, hidden mark-ups, misleading marketing, and cards failing to reflect processing costs.
It is estimated that with these charges included, around £10 billion is taken from UK travelers who plan to go overseas. Consumer Focus hopes that the OFT will make sure that customers are dealt with fairly.
Chief executive Mike O’Conner pointed out that consumers lose money without understanding it, saying, “Individuals buy holiday money infrequently and so may not shop around much or may just stick with the same supplier.”
It is hoped that this will simplify overseas charging systems on credit and debit cards, including cash withdrawal fees in the UK, ensuring that processing fees are clear and consistent and exchange rates reflect the fees. Another consumer group, the website Moneynet has said that debit cards represent the largest amount of variation in charges.
The banks however, were disappointed that the complaint occurred before discussion with the industry, with the British Banker’s Association pointing out that High Street banks are not the only companies which provide currency exchange services. Costs to smaller businesses should be taken into account, with various fees from banks in other countries, which might not have free banking, or costs to small businesses for credit card or debit card fees.
According to Melanie Johnson, chairperson of the UK Cards Association, card usage is the most competitive option even though charges accrue, due to the convenience, security, and protection offered.