International payments and the need for a dedicated regulator

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.