15 December 2017
Neville Lacey

OFX - international payments

Neville Lacey - OFX (formerly UKForex)

2Posts 15,356Views 0Comments
Finextra community

Financial Services Regulation

This network is for financial professionals interested in staying up to date on financial services regulation happening anywhere in the world. CFOs, bankers, fund managers, treasurers welcome.

International payments and the need for a dedicated regulator

02 June 2017  |  10192 views  |  1

Most international payments providers exist as an alternative to high street banks. They provide their customers with a good deal, are transparent about their fees, deliver excellent customer service, and transfer money quickly, without hassle.

Despite this, the wider international payments industry has been tarnished by allegations of profiteering, poor service and shady charging models. For every transparent, well-priced provider, there are several others that are less honest with their customers, or from whom a customer would struggle to recover their money should something go wrong with a transfer.

As they say, a few bad apples can spoil the apple cart – and unsurprisingly, consumers may not know who to trust with their money.  

But the question this begs is why there should be such a broad spectrum when it comes to payment providers and the parameters in which they operate.

In my opinion, it’s time our industry had a dedicated regulator.

What’s the concern?

To be clear, international payments are currently regulated in the UK – the question is whether the current system could be improved for the consumer.

At present, foreign exchange is caught between various jurisdictions, including the HMRC, OFT and FCA. They do a good job, but none has full responsibility for international payments, leaving some elements altogether unregulated. Without a single regulator, the international payments industry cannot be effectively policed from end to end – and that’s a real problem, not to mention a consumer confidence shaker.

I see the opportunity for a powerful, well-resourced regulator whose focus would be limited entirely to foreign payments. This would promote the best possible outcome for the industry, and more importantly, for the consumer.

Protecting the consumer

At the moment, consumers can be faced with a bad deal. Though many international payments companies are transparent about their fees, there is no regulator capping the amount that a company can charge its customers in fees, nor is there a limit to the margin they can add to exchange rates. This leaves the door wide open for those looking to make a quick profit at the expense of consumers that aren’t aware of their options.

Furthermore, if things go wrong with foreign exchange, the Financial Ombudsman cannot intervene to help anyone wishing to raise a serious complaint. The Ombudsman can resolve issues on the payments side (for example, if a company fails to deliver funds within a promised timeframe) but can’t do anything about FX. Like Trading Standards, it simply doesn’t cover this side of international payments – leaving consumers vulnerable to exploitation from providers that quote one exchange rate, and then deliver another that’s far worse.

A dedicated regulator would champion and protect the rights of the consumer, ensuring they experience the best of the industry.

Regulation is not to be feared

Ultimately, the consumer deserves a regulator that’s on their side. Any customer-centric provider would agree and support this, if providing good service and a positive experience was truly at the heart of their business.

Although some will be wary of a regulator adding to burdensome bureaucracy, those that fear regulation must understand that it will be almost impossible to clean up the industry without it. Many firms already provide their customers with excellent service, are transparent about their fees, and are fair in their pricing. But what about those that don’t? The reality is that they’ll need a regulator to push them – why else would they change their ways?

Regulation would challenge providers to provide a fairer, more open, and mutually beneficial service. In doing so, it would not only restore the reputation of the industry, but also rebuild consumer trust and ensure the best outcome for anyone looking to send money abroad.  


TagsPaymentsRisk & regulation

Comments: (1)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 05 June, 2017, 12:19

There was talk of a cross-border payments regulator 20+ years ago. Regulator is geared up to stipulating FX rates, fees, delivery period, etc. However, problem is, in the event of an "SLA" breach, it's impossible to sue the service provider because of the involvement of multiple jurisdictions in a typical cross-border transaction. Idea was given up because there wasn't much point having a regulator without any enforcement teeth. The only way around this limitation I can think of from then to now is for ICC / ICJ types of UN judicial bodies in The Hague to open a separate wing to prosecute "international payments criminals" across all jurisdictions!

Be the first to give this comment the thumbs up 0 thumb ups! (Log in to thumb up)
Comment on this story (membership required)

Latest posts from Neville

Brexit: What now for London fintechs?

08 November 2016  |  5165 views  |  0 comments | recomends Recommends 0 TagsRisk & regulationBrexit

Neville's profile

job title Head of the UK and Europe
location London
member since 2016
Summary profile See full profile »
I am head of the UK and Europe at OFX, one of the world's largest international payments companies: www.ofx.com

Neville's expertise

Member since 2016
1 posts0 comments
What Neville reads
Neville writes about
PaymentsRisk & regulationBrexit
Neville's blog archive
June 2017 (1)2016 (1)

Who's commenting on Neville's posts

Ketharaman Swaminathan