Money transfer firm Wise is calling on the Government to fix weak legislation which enables banks to hide the cost of FX transfer fees charged to small and medium businesses.
Wise says that last year, UK SMEs lost £2.8bn to hidden international banking fees, creating an artifical price barier for companies that want to expand abroad.
In January, Wise revealed that HSBC has the highest fee for GBP to EUR exchange rates (3.7%), followed by Lloyds at 3.6%, Barclays at 2.75%, and NatWest, TSB and Santander all at 2.5%.
Wise says that the expensive, complicated and slow services that currently dominate the market is made worse by poort regulation. This is due to a ‘corporate opt out’ which means that banks don’t have to apply existing, albeit patchy, payments transparency regulation to SMEs. This makes it easy for banks to claim that they have ‘zero fees’ or ‘0% commission, while hiding their mark up in the exchange rate”.
Wise is calling on the Government to End the Opt Out, and for regulation to be further tightened to ban hidden fees for businesses and as well as consumers for good. It has launched a petition on its website addressed to Prime Minister Rishi Sunak.
Magali Van Bulck, head of Emea policy at Wise, says: “For too long, financial providers have been charging grossly unfair fees and inflated exchange rates. This needs to end now, and the Government can do so without costing the taxpayer a penny. Everyone loses out to hidden fees, but the problem is most acute for SMEs.
“Existing legislation is weak and patchy, but it doesn’t even apply to SMEs due to a corporate opt out. This drives up costs, dims competition and costs SMEs money, growth and opportunity.”
This has been a long-running cmpaign for Wise. In July last year, the firm teamed up with 14 of London’s biggest fintech companies, including Revolut and Monzo, to demand an urgent review of legislation regarding hidden bank fees for international payments.
In an open letter to the Chancellor Jeremy Hunt, the fifteen signatories claimed that consumers and SMEs in the UK lost a total of £5.6 billion in mostly hidden foreign exchange fees in 2022, and current ambiguous legislation allows major providers to keep earning profits through these hidden fees.
