British SMEs Suffer £2.8 Billion Loss in 2023 Due to Bank FX Fees
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
Money transfer company Wise is appealing to the governmental bodies to provide solutions to weak legislation. This situation has led banks to hide the cost of FX transfer fees charged to medium and small enterprises.
Wise expressed dissatisfaction about UK SMEs’ potential losses to hidden international banking fees. It stated that the UK SMEs witness a significant loss of assets of about £2.8 billion to undisclosed global banking fees. This loss created a barrier in price for firms that intend to expand abroad.
Wise Is Urging Governmental Bodies To Address The Issue Of Weak Legislation
In January, Wise revealed that HSBC witnessed a significant 3.7% exchange rate in fee for GBP to EUR, followed by Barclays at 2.75%, Lloyds at 3.6%, and Santander, TSB, and NatWest all at 2.5%.
Wise further noted that the slow, complicated, and expensive services that presently govern the markets are caused by poor regulation. This challenge is due to a ‘corporate opt-out’ indicating that financial institutions don’t have to pay transparency, albeit patchy, and existing regulation to SMEs.
With these challenges, banks can easily utilize the opportunity to claim that they have 0% commission or ‘zero fees’ while covering their markup in the market exchange rate.
The head of Emea policy at Wise, Magali Van Bulck, highlighted that financial providers have been charging wholly unfair inflated exchange rates and fees for far too long now. He further urges the Government to deploy measures to control these issues without imposing a cost on the taxpayer. However, everyone potentially loses money due to hidden fees, but the impact is particularly acute for SMEs.
Wise Proposes Advocacy Efforts In Addressing Hidden Bank Fees
While existing legislation is patchy and weak, SMEs are not applicable due to a corporate option out. This reduces competition and costs SMEs money.
In July last year, the company partnered with 14 of London’s leading fintech firms, like Monzo and Revolut, to request a crucial review of legislation concerning undisclosed bank fees for global payments.
In an open letter addressed to Chancellor Jeremy Hunt claimed that SMEs and customers in the United Kingdom lost a total of £5.6 billion in mostly hidden foreign exchange fees in 2022. Moreover, the present ambiguous legislation enables leading providers to continue earning profit via these hidden charges.
