The FCA has published a statement on the use of the interbank rate in online currency converter tools.
The FCA is concerned that payment institutions and e-money institutions may have used currency converter tools in relation to their currency transfer services in a misleading way. Tools which convert currency at the interbank rate may be used in such a way as to give consumers the misleading impression that the rates shown are available to them, rather than the materially inferior rate that they are likely to achieve. Furthermore, consumers may not become fully aware of the inferior rate they are likely to achieve until an advanced stage in the customer journey, commonly after a customer registration process has been undertaken. At that stage, consumers may be unlikely to shop around.
The FCA has previously and publicly reminded firms offering currency transfer services of its concerns (see our previous blog here).
The FCA is actively considering further investigations and action in this area. In doing so, it will have particular regard to any firms which do not take appropriate steps in light of the announcement. Additionally, following engagement with HM Treasury, the FCA’s rule making powers are to be extended in relation to payment services, which will allow the FCA to apply rules to financial promotions issued by payment and e-money institutions. The FCA is planning to consult on making new rules using these powers as a priority.