Are you a payment services firm who engages with retail customers, with those services involving currency conversion? If so, this read is for you.
The regulator’s focus on Consumer Duty amongst payment services firms has yet again been reinforced as a priority, with the FCA releasing a study on best practices for transparency in international payment pricing. Their reference to the Handbook’s requirements mandating that, under the Duty, firms must ‘communicate information to retail customers in a way which is clear, fair and not misleading’ forms part of Thistle’s message across our series of Consumer Duty articles: that communication is key to helping you deliver good outcomes under Consumer Duty.
What does this study refer to?
The FCA conducted a close examination of websites, amongst firms offering international money remittance and cross border payments, on the clarity of pricing information before a transfer was initiated and firms’ incorporation of reference rates (i.e. the benchmark rate used by a firm to calculate its pricing).
What are the key takeaways from the study?
From the results of the FCA’s study, we observed the three C’s, three intertwined areas of poor practice, which firms in this sector need to consider improvement on:
- Clarity: Some firms were not being fully clear (either intentionally or unintentionally) about how their conversion rate includes a markup in addition to the reference rate, whereas others were displaying pricing information that is difficult/laborious for customers to find
- Completeness: Some firms were not providing a full disclosure and comprehensive breakdown of costs in the process leading up to the consumer committing to the transaction
- Care: Some firms were lacking the proactive support that embodies the spirit of the Consumer Duty – the FCA observed firms failing to proactively inform consumers that intermediary/recipient bank fees would change the final payment amount. This left customers to their own devices, only realising the impact after the said fees had been incurred.
What are the next steps?
The FCA has reiterated that firms must integrate the regular monitoring of their communications’ effectiveness into their processes, as a driver for positive outcomes under the Duty.
This means ensuring that the three C’s, amongst other points in the FCA’s detailed feedback, form a part of redefining your firm’s approach to communications. The assessment of effectiveness not only needs to be conducted internally, but should be informed by a constant feedback loop set up with existing customers and understanding the FCA’s regular engagement on compliance shortfalls within the context of your business. If you would like to learn more about how the FCA’s international payments study or (more widely) the Consumer Duty applies to your business, please reach out to a member of the Thistle team to see how we can support.
Meet the expert
Rohan Chakraborty, Senior Consultant 
Leveraging his experience as a risk advisory consultant providing regulatory and legal support for banks, PSPs and EMIs, Rohan joined Thistle Initiatives in 2023 as part of its Payment Services team.
He is excited to work alongside a talented team of payment experts to continue guiding clients in meeting their regulatory obligations.