Banks In The UK Under Scrutiny After $180Billion in Hidden Fees Were Revealed

January 24, 2024

Wise UK, an international money transfer company, in conjunction with Edgar Dunn and company,  recently revealed hidden fees amounting to $180Billion last year alone, as banks “profit from consumer confusion and industry opacity.”, Wise is now prompting banks to be more transparent about their exchange rates.

According to Kristo Käärmann, CEO and co-founder of Wise, for the last 13 years, banks have been challenged to be honest about their fees, however, banks haven’t changed anything, or at least not voluntarily, and they are still sneaky about their markups.

(Banks) believe hiding fees gets customers to overpay. They may be right. Not all people and business owners have the time and desire to calculate the hidden margins they are charged.

According to Wise, as far as which banks are the worst offenders, HSBC takes the lead, charging 3.7% hidden markups. Recently this bank has launched a new product called ‘zing’, which promises to be more transparent about its fees, however, this “does not offer this transparency to its existing customers.”

Other banks that have been found to be offenders are Barclays and Lloyds Bank, banks who “play-act about being transparent”, but their hidden fees can be found “in a hard-to-find disclaimer detailing the hidden fees as a markup”.

According to Kristo, the rise of new companies, such as Wise, or products such as Zing, suggests there is value in transparency, and it’s a concept even banks understand. However, not honoring their current clientele by being honest about fees incurred is “quite cynical.”

It’s time banks were transparent about exchange rates, and for hidden fees to finally become a thing of the past.

Unsurprisingly, in the UK, only 22% out of 1,000 consumers surveyed by Censuswide admitted they trust their bank to give them a fair deal “across products and services.”

The study further details that 42% of consumers in the UK send or receive money across borders, and 52% of these correspondents say these remittances are vital to their family overseas, similarly, 15% of correspondents admit they rely on money sent from overseas to “support their day-to-day life in the UK.”

Furthermore, 88% of Brits spend their holiday overseas, and only a negligible 14% check if their bank is being fair about exchange rates. This translates to the millions that are being lost by Brits on their holidays yearly.

Unfortunately many consumers rely on banks to send or receive money, meaning that even if they knew about these fees, necessity would still dictate they use these services, however, with the rise of independent companies, it would do well for consumers to do their research when choosing banks. The situation gets trickier as it is difficult to get a bank or banker to admit to any hidden fees, but as the economy worsens and inflation goes up, keeping an eye on finances is more important than ever.

Want to learn more? Check out The Fintech Times’s full write-up here.

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