Banks have agreed to cut fees imposed on holidaymakers following an investigation by a government watchdog.
Lloyds TSB, Barclays, RBS, Santander and the Co-op have all agreed to scrap charges of between 1.5 and 2 per cent, which are applied when customers use their debit cards to buy foreign currency before leaving the UK.
This could be at a post office, on the high street or at an airport bureau de change.
The Consumer Focus watchdog says this will save travellers around £20 million a year.
Rival banks including HSBC, Halifax/Bank of Scotland and Nationwide do not impose this kind of fee.
The change comes as a result of an official complaint by Consumer Focus to the Office of Fair Trading, and the OFT’s subsequent investigation.
More transparency on foreign charges
Leading banks have also agreed to make changes to the way they display the array of charges imposed when foreign currency is bought at a traveller’s destination.
By the end of 2013, a number of card providers have committed to showing customers exactly how their fees break down if they use a foreign ATM, for example.
The Consumer Focus “super-complaint” to the OFT, made in September, alleged that a combination of complex charges and poor or misleading information have led to consumers paying too much when buying foreign money or using cards overseas.
A number of consumer bodies have the power to make super-complaints, which force the OFT to launch an inquiry to assess consumer detriment.
More improvement needed
Consumer Focus welcomed the OFT’s changes, but said it wanted travel-money providers to go further.
Chief executive Mike O’Connor said: “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. The fees charged are opaque and difficult for consumers to calculate.
“It is particularly welcome that the OFT has worked with the big banks to stop withdrawal fees being charged when people buy currency on their card in the UK. It is only right that this unfair cost, which effectively charges customers for the privilege of taking money out of their own account, is stopped.
“We also want to see an end to deliberately misleading marketing phrases such as ‘0% commission’, as services are not fee-free. Consumers have a right to know how much they are paying for their transaction and whether there are better options available.”