Currency exchange kiosks at airports offering ‘absolute rip off’ rates to holidaymakers must be regulated, according to industry experts.
Following an expose by the Daily Mail this summer, when we revealed travellers can lose £100 in poor exchange rate deals when handing over £500 for euros or US dollars, we have discovered bureaux are not fully regulated by a finance watchdog.
It enables currency exchange kiosks not to clearly advertise rates on a board but to negotiate deals by word of mouth – making it easier to pressurise holidaymakers into accepting lousy offers.
Andrew Hagger, founder of personal finance website MoneyComms, says: ‘A decade ago rates at airports were uncompetitive and typically you lost 10 per cent on the rate of exchange than if you went elsewhere.
‘But now it seems to be getting worse – and not clearly showing the rates but having to ask for them seems totally unfair.’
Poor signage: Stansted airport did not put the exchange rates up clearly on a board
While rip-off rates at the airport are not new, our investigation found three major problems when it comes to currency exchange, making it harder than ever to decipher what rate travellers will receive when exchanging money before a trip:
– Hard to read currency boards which meant a long wait to see major currencies, such as euros and dollars;
– Offers of 0 per cent commission plastered on kiosks which aren’t a clear picture;
– A lack of information for travellers about the poor rates before turning up at the airport.
We believe it is time for currency firms to be regulated and for clearer framework put in place so travellers can make informed decisions.
James Daley, managing director of consumer group Fairer Finance, says: ‘It is high time we put an end to the absolute rip-off rates being allowed at airports.
‘We need laws put in place so the Financial Conduct Authority (FCA) can demand these kiosks offer deals that are clear, fair and not misleading.
‘Not having rates clearly marked up on a board is wrong.
‘Otherwise, it may only be a matter of time before we face a scandal where passengers get cheated out of money – not just be given uncompetitive rates.’
The bureaux have been slammed for advertising ‘no commission’ charges – which does not mean you get a bargain.
Our investigation found 0 per cent commission plastered at airport kiosks had small print which meant it only applies ‘on transactions over £300.’ With lesser amounts there can be a £5 fee.
Daley adds: ‘It is ludicrous to think commission free is in some way offering you a free deal.
‘If there is no commission, then the likelihood is the exchange rate is going to be particularly bad as this is where they make up their money.
‘The loophole where the true cost of exchanging foreign currency is hidden urgently needs to be closed – and for that you need the Government to act.’
Airports tight–lipped on rates offered
The Money Mail investigation found it is incredibly difficult to obtain the exchange rate at bureaux de change at airports without actually visiting.
Even when at an airport such as Stansted, rates are only displayed on slow scrolling electronic boards where you can stand at least five minutes before a rate you might be after appears on the screen.
Our investigation found the screen displayed a variety of flags of different countries without the rate. Rates were on a live ticker at the bottom of the screen, in small font.
Details of airport rates are also kept off the internet – and companies are reluctant to share them.
When we visited Stansted airport in August the Change Group offered €0.84 for £1 and $US 0.98 for £1.
This compared to €1.13 and $1.32 respectively if bought online 24 hours in advance from the same provider to pick up at the airport.
Cash: Rules are in place to stamp out money laundering – but not to clearly advertise rates.
Consumer body Which? is also concerned how travellers are being exploited at airport exchange outlets.
Reena Sewraz, retail editor at Which?, says: ‘Preparing and packing for your holiday can be a stressful business, but don’t leave getting your travel money until the last minute.
‘Airport bureaux de change rarely offer the best currency exchange rates – and with a captive audience of holidaymakers surrounding them, they arguably have little incentive to.’
The City regulator FCA says bureaux de change do not fall under its remit – even though it says ‘international payment pricing’ should avoid ‘poor practice’ that includes ‘not providing clear and full costs prior to the consumer committing to the transaction.’
It says: ‘We are only able to make rules and guidance for activities that fall within our regulatory remit, as provided by Parliament.
‘Cash-to-cash currency exchange activities such as bureaux de change, are defined as ‘excluded activity’ in the legislation and therefore do not constitute payment services.
‘As such they do not fall within our regulatory remit.’
But the FCA points out that exchange kiosks must still abide by HMRC money laundering rules, so must keep a full record of their deals.
An HMRC spokesman says: ‘We are committed to supporting businesses to protect themselves from criminals who prey on their services.
‘That includes taking action against the minority who fail to fulfil their legal obligations under the Money Laundering Regulations.’
Mr Daley also points to the collapse of foreign exchange provider Crown Currency Exchange 15 years ago, owing an estimated £20million to around 13,000 customers, as another reason for currency firms to be regulated in general.
Because it was not fully regulated by the FCA victims were not protected by the Financial Services Compensation Scheme for losses of up to £85,000 – just like with many currency exchange bureaux.
The Cornwall-based business allowed people to pre-order foreign money for the future at a set price.
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