Regulator mulls action over ‘misleading’ currency converter tools
The Financial Conduct Authority (FCA) said it is concerned that payment and e-money institutions may have currency converter tools that use and display the interbank rate, giving consumers the impression they will achieve the rates shown.
In reality, interbank rates are the rates traded between banks before any mark ups, and in fact, consumers will actually get a “materially inferior rate”.
Plus users only tend to find out they’ll get lower rates than expected much further down the line. The FCA said that at this advanced stage, consumers may not be able to shop around.
The regulator has previously warned currency transfer services about their use of interbank rates in promotional material and on their sites and said it would take action if it found firms weren’t acting accordingly.
The statement read: “Since our investigations commenced, a number of firms have taken steps to ensure they do not risk misleading customers as to the conversion rate they will achieve if they use the firm’s currency transfer services.
“However, there are a number of firms that are still using the interbank rate in a currency converter tool and in other promotional material relating to their currency transfer services in a potentially misleading way.”
The FCA said it is “actively considering further investigations and action in this area”.