The FCA reviews how firms’ international payments pricing transparency stacks up against the Consumer Duty

While in the last week the FCA has been busy in other areas (including the crypto space), it has also found time to publish feedback on how payments firms are complying with the Consumer Duty. The feedback focuses on international payment pricing transparency, an area that has been subject to regulatory scrutiny in the UK / EU for some time. 

Key takeaways

• The Consumer Duty remains high on the supervisory agenda: The fact that the FCA has proactively reviewed firms' websites is an indication that the Duty remains an area of focus for the FCA. 
   
• A key message arising out of the review is that the FCA expects firms to break down, and where necessary explain, their fees prior to a customer making an international payment. The review provides the following examples of good and bad practice alongside some worked examples.
   
• The good…: Good practice involves displaying all of the following:
  • The amount being remitted or transferred, in GBP.
  • The exchange rate applied.
  • Where firms present a conversion rate inclusive of a markup, a clear explanation that this is the case.
  • Markups above reference rates (which should be displayed as a cost to the consumer).
  • Variable fees.
  • Fixed fees per transaction.
  • Total remittance fees, in GBP.
  • The amount recipient receives, in local currency.
     
• …And the bad practices: Examples of poor practice include:
  • Marketing transactions as "zero cost" due to the absence of fixed fees, despite charging a mark-up.
  • Not informing customers upfront that intermediary and recipient bank fees may impact the final payment amount.
  • Making pricing information difficult to find.

Looking ahead

The overarching principles of transparency and acting to deliver good outcomes are not new both in the payments space and outside of it. However, firms operating international payments businesses may find it instructive to benchmark their own disclosures against the granular examples that the FCA provides. This would be prudent, particularly as the FCA has noted that it will likely undertake work in this area to understand what improvements have been made Payments firms more broadly should ensure that their compliance plans keep the Consumer Duty as a priority.