Top banks agree to make foreign card use clearer
The UK’s leading banks have agreed a deal that means they will be clearer about their charges for using cards while abroad.
The Office for Fair Trading (OFT) has announced it will impose new regulations that will force banks to make it clear how much they are charging customers for using cards overseas.
The move follows a complaint by watchdog Consumer Focus that many banks were deliberately confusing customers over the cost of using their card abroad.
The OFT has said that the majority of banks have agreed to the changes. These include Lloyds, HSBC, Capital One, American Express and the Co-operative Bank.
These banks have agreed to display the charges that customers incur while abroad more clearly on their monthly and annual statements.
The OFT says this will lead to more transparency over how much banks charge for card use abroad, and more clarification amongst customers.
Many customers use travel money cards to try and save money by avoiding these large bank fees.
“We are very pleased that the travel money industry has agreed, following an OFT short investigation, to make these significant voluntary changes,” said John Fingleton, OFT Chief Executive.
“We believe they will reduce confusion about the charges that apply when buying travel money in the UK or using cards overseas, and hope they will allow holidaymakers to be far better informed when making choices about how they spend abroad. This should drive greater competition in the UK travel money market.”
Many banks have also agreed to scrap charges for customers who use their debit cards to purchase foreign currency in the UK. There was previously a charge of between 1.5 and 2 per cent levied by most banks.
“Consumers should be able to buy foreign currency without being misled, confused or short-changed. The OFT has agreed with Consumer Focus that people are losing out due to the action of banks and others buying and selling holiday money,” said Mike O'Connor, Chief Executive of Consumer Focus.