Headline Currency Exchange Rate Warning

Published / Last Updated on 18/07/2017

Headline Currency Exchange Rate Warning.

The FCA has issued a warning regarding the use of the interbank rate in online currency converter tools and is concerned that payment institutions and e-money institutions may have used currency converter tools in relation to their currency transfer services in a misleading way.

Feeds and Tools

There are various feeds and tools that can be plugged into a website pricing system to convert the actual ‘charged’ currency at the interbank exchange rate to give consumers an idea, in some cases a misleading impression, of the price that you will pay in your local currency, rather than the real exchange rate (which literally changes every minute).  In short, if you buy something in $ dollars or € euros and it may be displaying the equivalent in £ sterling but it may not be that actual conversion rate that you would get.

For example, when on some UK online auction, music or shopping websites, you often see a price in e.g. $ as the seller is international, but it then shows an estimate in sterling as to what you will pay.  This may be very different to what you actually pay given how quickly rates change and of course, if they are only using an interbank exchange rate rather than a real market rate.

The FCA also warns that consumers may not fully aware of the less competitive ‘real’ rate until at advanced stage of the buying process, e.g. you have registered and many consumers are then unlikely to shop around once they have ‘bought in’.

Even some financial firms and currency exchange sites are doing this:

The FCA also includes payment and e-money institutions engaged in currency transfer services in this warning and will ensure such firms do not use the interbank rate in a potentially misleading way. The FCA is carrying out further investigations and will of course enforce action in this area if firms are not treating their customers fairly.

Comment

Watch your online purchases and watch any holiday currency or larger international transaction rates that you buy/pay for.

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