Financial advisers are recommending foreign exchange providers “blind”, without knowing how much their clients will be charged, according to an industry expert.
Helen Scott, managing director of Leeds-based Eris FX, is lobbying ministers and regulators to force currency providers to provide clear, upfront information rather than pricing customers based on their perceived value or negotiating skills.
“The big problem with foreign exchange is that many currency companies don’t publish their real customer dealing rates. Instead they provide a ‘currency converter’ on their website, which many people mistakenly believe shows them the cost of their currency deal,” explained Helen.
“With only a handful of exceptions, these tools do nothing more than show the ‘interbank’ or wholesale exchange rate. This is the rate that banks deal at between themselves but is not available to individuals.
“IFAs are making commercial decisions when they don’t fully understand what they are being quoted. No-one is regulating this industry and it’s high time that it was put under the spotlight.”
Helen added: “Just imagine pulling into the petrol station forecourt, to find that the sign gives you the price of a barrel of crude oil, rather than the price you are actually going to pay for a litre of fuel. Drivers would be outraged but this is exactly what is going on in foreign exchange.”
The problem is made worse by a lack of credible comparison sites for foreign exchange. To illustrate this, Eris FX has set up www.currencyratescompared.com , which highlights providers that publish their customer dealing prices for transfers from Pounds to Euros. It also names and shames those that don’t.
Eris FX is lobbying government ministers to change the way that foreign exchange is sold to the public. It has also created a petition that calls for all specialist foreign exchange providers to make their customer dealing rates available on a comparison site approved by the Financial Conduct Authority (FCA).