FX Firm Rapped For Misleading Money Rates And Fees

Advertising watchdogs have warned a foreign currency exchange firm to change misleading rates displayed to customers.

Moneycorp handed out leaflets to visitors to a property show comparing exchange rates for Sterling and euros with an ‘indicative rate’ of 1.3878 and stating the firm offered lower rates than banks and low transfer fees.

Another currency exchange, Eris FX Ltd, complained about the leaflet claiming the comparison was misleading as the comparison was based on an interbank offer rate without any fees that was not available to consumers.

Moneycorp denied the claim arguing the comparison figures were shown to visitors to a French property show to give them some idea of how much homes sold in euros would cost in Sterling.

How currency exchange rates are set

The firm also explained the interbank offer rate was set at midday every day and was the rate central banks and large financial institutions paid on currency deals.

Banks then added a margin and transfer fees to the rate to sell foreign currency to exchange brokers like Moneycorp, who then adjusted the rate and added their fees as well.

The Advertising Standards Authority (ASA) investigated the complaint and decided that consumers would assume the rate quoted was the one they would receive in the absence of other qualifying information.

“We see no problem with quoting indicative rates as long as the rate is indicative of the rate available to consumers,” said an ASA spokesman.

Rate and fee claims need qualifying

“However the rate in the leaflet was based on the interbank offer rate and not the actual exchange rate available to consumers at that time, so we feel it is misleading especially as we had no evidence to show all customers achieved that rate on the date of the property show.

“Moneycorp only offered us a summary of the rate some customers achieved.”

The ASA also ruled that ‘low transfer fees’ did not make clear to consumers how much they would pay or that the fee varied between customers.

Although the ruling is not binding on other foreign exchange firms, the watchdogs consider foreign exchange brokers who did not qualify statements about currency rates and fees in advertising are likely to mislead consumers.

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