OFT forces forex charges change

OFT forces forex charges change

Some charges levied by banks and credit card companies on holidaymakers when buying foreign currency are to be scrapped under pressure from the Office of Fair Trading.

Other costs are to be displayed more clearly in monthly statements.

The OFT is also forcing currency suppliers to review 0% commission offers and reveal what the true costs are.

The move follows an investigation into a complaint from the Consumer Focus watchdog which claims the companies make £1 billion a year from travel money charges.

The watchdog's complaint said that converting £500 into euros could cost between £10 and £30, even though the service provided was essentially the same.

Five companies - including Lloyds, Barclays and RBS - impose charges of between 1.5% and 2% if customers use their debit cards before leaving the UK to buy foreign currency. They have agreed to scrap this charge.

Banks and card companies will also show separately on statements those charges which are incurred overseas, including a typical "loading fee" of nearly 3%, rather than hiding them in the cost of the items travellers have bought.

Consumer Focus says that exchange rates already include mark-ups levied by suppliers and so are not fee-free as the 0% commission might imply.

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