Planning your holiday is stressful enough without having to worry about potential charges when buying foreign currency. So, travellers should be pleased to hear the OFT has acted to make industry clean up its act.
In September, Consumer Focus launched a super complaint lamenting the excessive level of charges levied on the use of credit and debit cards when buying foreign currency in the UK.
The complaint also addressed the lack of transparency around the different types of charges that may apply when customers use their cards abroad. Today the OFT announced its response to the super complaint and it looks like the sector is in for a few changes.
What’s going to change?
Barclays, Co-op, Santander, Lloyds and RBS – all of which have previously charged debit card holders up to 2% to buy foreign currency in the UK – have agreed to stop charging.
Which? has previously demanded that customers should not be charged when using their debit card to buy currency and we continue to push the government to outlaw debit card charges altogether.
The UK Cards Association and the British Bankers Association have also announced that they are going to issue guidelines for how their members present any foreign transaction charges on statements, websites and marketing material.
The hope is that banks and card companies will be forced to make these charges clearer and more consistent for their customers.
The end of excessive foreign currency charges?
So is this a victory for the consumer? The answer is ‘maybe’. Whilst we welcome the move by the industry to improve information on charges, it should be said that people continue to face a raft of unfair charges in other areas, such as unauthorised overdraft charges or excessive surcharges when paying for goods and services online.
The success of this move also depends on the robustness of the guidelines and banks’ willingness to follow them. While it’s important that charges are made clear and displayed in a transparent way, we also think that charges in general should be fair and reflect the actual cost incurred by the banks. At present, they often don’t.
So although we’re pleased about this move, we’re not too impressed.
Do you think the proposed changes will make it easier for you to make an informed choice when paying for goods abroad or buying foreign currency?