Top London Fintechs Call For A Review Of Legislation On Hidden Bank Fees

Fintech companies in London are calling for an urgent review of the legislation pertaining to hidden bank fees in international payments. The fintechs that have called for the review are fifteen of the largest across London, including Wise, Monzo, and Revolut.

London fintechs want a review on hidden bank fees

The fifteen fintechs advocating for the change in legislation wrote an open letter to Chancellor Jeremy Hunt. They claimed that the existing legislation had resulted in consumers and SMEs operating in London losing £5.6 billion because of the hidden foreign exchange fees in 2022.

The current legislation is largely ambiguous, and it allows the leading providers to continue generating profits from the hidden fees. The letter also noted that there were differences between the platforms that claimed to charge zero fees and commission, while the fees charged on exchange rates were transferred to the customer.

“There is widespread practice of firms showing currency conversion services as having ‘zero fees’ or ‘0% commission.’ This is highly misleading when a much larger charge is embedded in the exchange rate, ranging from 2.5% to 3.7% over the mid-market rate for a transfer to EUR or USD with a UK high street bank, but this is never communicated to the customer,” the letter said.

In the letter, the fintechs have urged the Chancellor to address this issue in the ongoing review of the Payment Services Regulation. Besides Monzo, Revolut, and Wise, the other fintechs that are also behind this appeal include Fairer Finance, Fire, GoCardless, NCFX, PayPlan, Plum, Seedrs, Startup Coalition, SumUp, Teya, and Truelayer.

London fintechs make a list of demands

The fintechs have also made a list of demands seeking to ease the international payment process. One of the demands is that the total cost of currency conversions be displayed up front to the consumers and SMEs before a payment is made. ‘

The fintechs have also demanded that the legal definition of the “currency conversion charge” include a markup regarding the mid-market rate. They have also advocated for an aggregated mid-market rate that is granted by a neutral provider that is approved by the Financial Conduct Authority (FCA).

The firms also want for these rules to be used on global currency conversions in support of Global Britain and not just apply to currencies being used in the EU. This letter also contains instructions on how the treasury needs to support the FCA to remove vague descriptions and guarantee companies have clarity on the rules they need to adhere to.

The head of EMEA policy at Wise, Magali Van Bulck, commented on the development, saying that the hidden fees in foreign transactions should no longer be applicable. He noted that these additional costs were having a negative effect on the finances of businesses and people in the UK. As such, the existing guidelines were no longer acceptable and demonstrated how companies are not giving fair value to customers.