Tuesday, 20 December 2011

Currency deal misses main target

The agreement by banks to scrap the fees they charge travellers who use debit cards to buy foreign currency in the UK – announced by the Office of Fair Trading today – misses the bull's eye. It will do nothing the reduce the huge gap between the rates offered to individual travellers and the commercial rate. Today, for example, you might have received €1.14 to the £, though the commercial rate was over €1.19 – a difference of 4.3%. Agreement to scrap charges, typically between 1.5 and 2% for credit cards purchases in the UK was reached with Lloyds/HBOS, Barclays, RBS/Natwest, Santander and the Co-operative Bank. Together with other card companies they have promised to provide clearer information on charges to customers buying currency abroad. The agreement was secured by the Office of Fair Trading after a super complaint by Consumer Focus. A spokeswoman for the OFT said the gap between rates had not been part of its investigation. It had tried to ensure travellers could make clearer comparisons between foreign currency providers, not least when they advertised 0% commissions. The OFT found that last year travellers spent around £32 billion abroad - of which £27 billion was holiday spending, That total included currency bought before departure and spending on cards while abroad. It resulted in estimated revenue of £1.1 billion for UK travel money providers.

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