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Help preventing Bank Rip-off When Sending money Overseas ?
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StopBankRipOff
Posts: 21 Forumite
I need help.
I believe my bank clearly broke the law when I sent a USD payment to the USA.
But my case was rejected by the Financial Ombudsman Service (I believe clearly erroneously), and I do not appear to have any appeal option to correct the obvious error.
These are the details of the case:
I wanted to make a payment to help a family in the USA in need of charity, that I became aware through a friend of a friend of my daughter.
So I sent £250 as US Dollars to the US bank account of my daughter's friend, for distribution secretly to the needy family.
My bank first converted the £250 into $369. The mid $/£ rate at the time showed that £250 was actually worth $385, but I was content for my bank to make an £11 fx profit from me to convert the £ into $ (I had no more effective way of doing this).
My bank then charged me £4 to send the $369 to the USA bank destination bank account.
I thought the £4 (which was taken from my GBP account separately as a fee) was a great rate, and I was doing really well – this mitigated the fx loss to a significant degree.
But I was really upset to discover that the amount paid into the USA destination bank account was $344 - $25 dollars short !
My bank told me that my own bank’s USA branch took $25 as a fee for moving the payment through the USA to hand over to the recipient’s bank.
My bank told me that I was advised that overseas parties might take fees from the payment, and I agreed to this option.
But this is nonsense.
Firstly, let me point out that this invidious practice has been banned in several countries, as it is clearly both misleading and unfair - see [FONT="]www consumerfinance.gov/blog/send-money-abroad-with-more-confidence [/FONT]where the USA protected its own consumers from agency banks taking unannounced fees, and see SEPA Euro payments within the EU where the practice of agency banks taking fees from the payment is also banned as it is recognised as being misleading and unfair.
Secondly, had I known that my bank’s USA branch would take a $25 fee from the payment, I would never have made the payment.
This is clear as my own bank actually offers a different £9 all-in route for making payment with guaranteed no-deductions. I didn’t use this method as the £4 option looked significantly cheaper.
So my bank clearly mislead me (and many, many others, from the research I and others have done).
My bank argues that it has no control over the charges its own USA branch takes from payments that it hands over to them for on-forwarding.
This is surely utter nonsense.
The US branch of my bank is acting as the agent and sub-contractor of my own bank in handling the payment. If there is a $25 fee to pay, the US branch should only be able to charge this to its principle – my bank – and then my bank must charge me the $25.
There is no scope to allow the US branch to effectively steal $25 from my payment without my prior permission.
Banks have a duty to be fair, and this practice is clearly and identifiably unfair and misleading, and therefore in breach of FCA rules.
[EDIT - This section is, as was pointed out later posters, erroneous - But further, the Payment Services Regulations 2009 states at Regulation 44:
Where an individual payment transaction under a framework contract is initiated by the payer, at the payer’s request the payer’s payment service provider must inform the payer of—
…
(b) the charges payable by the payer in respect of the payment transaction; and
(c) where applicable, a breakdown of the amounts of such charges.
My bank has clearly not done so, and is therefore clearly acting illegally. END EDIT]
The Financial Ombudsman ruling ignored this law breach, and stated that my bank does not have a system in place for finding out the fees of banks it uses as its agents and sub-contractors. My bank also said that if I had asked what the charges would be, my bank might have been able to try to find out.
The Financial Ombudsman ruling stated that since my bank says in their Terms and Conditions that there may be additional charges if the sender chooses the online payment option to pay agency bank fee, my bank is allowed to allow its US branch to take unspecified amounts from payments I make.
This is clearly nonsense[, and in clear breach of Regulation 44 of the Payment Services Regulations.]
It is also clearly an unfair and misleading practice of the bank.
I appreciate that the behaviour stated above is standard practice for UK banks, and it has not yet been banned here, even though it has been outlawed in other regions (such as the Eurozone and USA, as it is unfair and misleading).
But just because the behaviour is standard UK bank practice, that does not make it allowable, nor legal.
If Fed-Ex UK sent an 18 link gold necklace to the USA for me, and only a 17 link gold necklace arrived at destination, no-one would take Fed-Ex UK seriously if they claimed that they had used Fed-Ex USA for the final delivery of the necklace, and Fed-Ex USA are allowed to take unspecified amounts of the necklace as a fee for their participation. They would be ridiculed beyond belief for such an argument.
But this is exactly the argument of UK banks, and whilst illegal, the Financial Ombudsman has erroneously upheld their behaviour.
Where can I go from here ?
How can the situation be corrected ?
I believe my bank clearly broke the law when I sent a USD payment to the USA.
But my case was rejected by the Financial Ombudsman Service (I believe clearly erroneously), and I do not appear to have any appeal option to correct the obvious error.
These are the details of the case:
I wanted to make a payment to help a family in the USA in need of charity, that I became aware through a friend of a friend of my daughter.
So I sent £250 as US Dollars to the US bank account of my daughter's friend, for distribution secretly to the needy family.
My bank first converted the £250 into $369. The mid $/£ rate at the time showed that £250 was actually worth $385, but I was content for my bank to make an £11 fx profit from me to convert the £ into $ (I had no more effective way of doing this).
My bank then charged me £4 to send the $369 to the USA bank destination bank account.
I thought the £4 (which was taken from my GBP account separately as a fee) was a great rate, and I was doing really well – this mitigated the fx loss to a significant degree.
But I was really upset to discover that the amount paid into the USA destination bank account was $344 - $25 dollars short !
My bank told me that my own bank’s USA branch took $25 as a fee for moving the payment through the USA to hand over to the recipient’s bank.
My bank told me that I was advised that overseas parties might take fees from the payment, and I agreed to this option.
But this is nonsense.
Firstly, let me point out that this invidious practice has been banned in several countries, as it is clearly both misleading and unfair - see [FONT="]www consumerfinance.gov/blog/send-money-abroad-with-more-confidence [/FONT]where the USA protected its own consumers from agency banks taking unannounced fees, and see SEPA Euro payments within the EU where the practice of agency banks taking fees from the payment is also banned as it is recognised as being misleading and unfair.
Secondly, had I known that my bank’s USA branch would take a $25 fee from the payment, I would never have made the payment.
This is clear as my own bank actually offers a different £9 all-in route for making payment with guaranteed no-deductions. I didn’t use this method as the £4 option looked significantly cheaper.
So my bank clearly mislead me (and many, many others, from the research I and others have done).
My bank argues that it has no control over the charges its own USA branch takes from payments that it hands over to them for on-forwarding.
This is surely utter nonsense.
The US branch of my bank is acting as the agent and sub-contractor of my own bank in handling the payment. If there is a $25 fee to pay, the US branch should only be able to charge this to its principle – my bank – and then my bank must charge me the $25.
There is no scope to allow the US branch to effectively steal $25 from my payment without my prior permission.
Banks have a duty to be fair, and this practice is clearly and identifiably unfair and misleading, and therefore in breach of FCA rules.
[EDIT - This section is, as was pointed out later posters, erroneous - But further, the Payment Services Regulations 2009 states at Regulation 44:
Where an individual payment transaction under a framework contract is initiated by the payer, at the payer’s request the payer’s payment service provider must inform the payer of—
…
(b) the charges payable by the payer in respect of the payment transaction; and
(c) where applicable, a breakdown of the amounts of such charges.
My bank has clearly not done so, and is therefore clearly acting illegally. END EDIT]
The Financial Ombudsman ruling ignored this law breach, and stated that my bank does not have a system in place for finding out the fees of banks it uses as its agents and sub-contractors. My bank also said that if I had asked what the charges would be, my bank might have been able to try to find out.
The Financial Ombudsman ruling stated that since my bank says in their Terms and Conditions that there may be additional charges if the sender chooses the online payment option to pay agency bank fee, my bank is allowed to allow its US branch to take unspecified amounts from payments I make.
This is clearly nonsense[, and in clear breach of Regulation 44 of the Payment Services Regulations.]
It is also clearly an unfair and misleading practice of the bank.
I appreciate that the behaviour stated above is standard practice for UK banks, and it has not yet been banned here, even though it has been outlawed in other regions (such as the Eurozone and USA, as it is unfair and misleading).
But just because the behaviour is standard UK bank practice, that does not make it allowable, nor legal.
If Fed-Ex UK sent an 18 link gold necklace to the USA for me, and only a 17 link gold necklace arrived at destination, no-one would take Fed-Ex UK seriously if they claimed that they had used Fed-Ex USA for the final delivery of the necklace, and Fed-Ex USA are allowed to take unspecified amounts of the necklace as a fee for their participation. They would be ridiculed beyond belief for such an argument.
But this is exactly the argument of UK banks, and whilst illegal, the Financial Ombudsman has erroneously upheld their behaviour.
Where can I go from here ?
How can the situation be corrected ?
0
Comments
-
I don't know about US laws, and surely they mean nothing for UK FOS, but in UK many banks charge for incoming foreign transfers, including from EU, and clearly show this in their fees and charges. I don't think that they breach the PSR by doing this.
E.g. http://www.halifax.co.uk/onlinebankinghelp/international-payments/?srnum=1
So, if it was the receiving bank that charged for the incoming transfer, it charged the recipient, not the sender.
Sometimes intermediary banks have their cut. I don't know how this fits into the PSR. If you check the above link to Halifax, they warn you about the possible charges - as PSR 44 requires.
Instead of spending so much time on complaining you could have spent very little time on basic research and found
http://www.mycurrencytransfer.com/money-transfer-to-USA/250-GBP
https://www.fxcompared.com/money-transfer/UK-USA?amount=250&bType=1&aDir=0&ref=filter
See also MSE article: Sending Money Abroad0 -
Grumbler,
I'm talking about out-going payments, and not in-coming payments.
Incoming payments are not relevant to this thread.
I could have used a money service for my outgoing payment, but with my bank appearing to charge just £4, why should I not use their service ?0 -
StopBankRipOff wrote: »I'm talking about out-going payments, and not in-coming payments.
Incoming payments are not relevant to this thread.
Your post was too long to read through. Are you saying that it was a US branch of your UK bank that sent the money to another US bank? This looks like the intermediary bank charge that I mentioned above.
If so, it would be interesting to know what UK bank it is and what it says about foreign transfers in its tariff.I could have used a money service for my outgoing payment, but with my bank appearing to charge just £4, why should I not use their service ?
If so:For all International Payments, the beneficiary's bank, and any foreign bank we may use to send the payment, may also take a charge. You'll only have to pay these charges if you choose 'sender to pay all charges' when you request your payment.
Beneficiary banks may charge for receiving international payments. Unless you are sending money in an EEA currency to an EEA country, charges may also be applied by other banks used to send the payment. These charges are not within our control and may be deducted from the payment.0 -
The world has gone mad - the bank going all the way to the ombudsman over £4 or £11 or even $25.
The bank should have told the OP to accept an inconvenience payment of £25 and told him they did everything they asked as per their terms and conditions under PSR.
I wonder if it actually went as far as OP suggests>?0 -
P.S.
That said, I agree that it's unfair that HSBC, "the world local bank", doesn't tell you in advance the exact amount you will be charged despite knowing this amount very well.
It's also very unfair that they don't tell you even the maximum possible amount.
FOS isn't the last instance in this country and was proven wrong many times by courts. You can try SCC, but IMO your chances of winning are slim.0 -
grumbler, jonesMUFCforever,
Are you saying that a bank can ignore the law (Regulation 44 of the Payment Services Regulations 2009) and not notify its customer in advance of actual charges - instead just have some wording about possible unspecified charges in contravention of the law?
If so, what is the law for ?
And why don't you care that banks have an obligation to specify actual charges in advance, and are not doing so ?
[posted before seeing grumbler's P.S. above -thanks for the P.S. grumbler]0 -
I've read the '44' several times, and I am no wiser whether it really requires the exact amount to be told in advance.
It says "the charges payable" that doesn't necessarily mean the amounts.
And "where applicable". Indeed, where?
What can we expect from our well paid lawyers and lawmakers, especially when Brussels is involved?0 -
What can we expect from our well paid lawyers and lawmakers, especially when Brussels is involved?
I don't believe that UK or EU law applies to US banking. And I wouldn't take this case anywhere, particularly not after the FOS has turned it down.0 -
StopBankRipOff wrote: »grumbler, jonesMUFCforever,
Are you saying that a bank can ignore the law (Regulation 44 of the Payment Services Regulations 2009) and not notify its customer in advance of actual charges - instead just have some wording about possible unspecified charges in contravention of the law?
If so, what is the law for ?
And why don't you care that banks have an obligation to specify actual charges in advance, and are not doing so ?
[posted before seeing grumbler's P.S. above -thanks for the P.S. grumbler]
They only know in advance their own charges - no bank knows other bank's charges.
Personally I would not want you as a customer - you are far more trouble than you are worth - be careful you don't get the letter 'Dear customer - we regret to inform you that in our opinion the banking relationship between us has broken down - under our terms and conditions we hereby give you 60 days notice that we intend to close your account etc etc'0 -
you probably can't expect them to spend any time to negotiate over a few pounds/dollars for some infrequent transactions with the US. As there are one or two weightier issues to be negotiated.
Also, I expect them to get their salaries for writing intelligible 'regulations' that don't need numerous judges and lawyers to interpret for big money.0
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