On 1 May 2025, the Financial Conduct Authority (FCA) published good and poor practice on how firms communicate the cost of international payments.
The FCA has identified variations in how firms communicate the costs associated with international money remittance and cross-border payments. This review aims to highlight good practices to help firms enhance consumer understanding of payment costs. The Consumer Duty, effective from 31 July 2023, sets a new standard for retail consumer protection in financial services. Subscribe to our Consumer Duty View here to receive timely updates on what’s happening across the market, industry discussions and themes and guidance on FCA updates relating to the Duty.
Communication Requirements
Under the Consumer Duty, firms must ensure communications are clear, fair, and not misleading. They should meet the information needs of retail customers, be understandable, and enable informed decision-making.
Review Focus
The FCA assessed the websites of firms offering international money remittance and cross-border payments to UK customers. The review focused on the clarity of pricing information provided before initiating a transfer, including details on exchange rates, fees, and markups.
Findings
Good Practice: Firms should clearly display all relevant information to consumers before they commit to the transaction, such as the amount remitted in GBP, exchange rates, markups, variable and fixed fees, and the total remittance fees in GBP. Intermediary and recipient bank fees should be explained where applicable.
Poor Practice: Issues identified include unclear transaction fees, undisclosed additional fees, and difficulty in finding relevant information. Some firms failed to communicate markups as a cost to consumers or misrepresented transactions as 'zero cost' despite markups.
These practices impact consumers' ability to compare prices and make informed decisions.
Examples of good and poor practice
- Fixed fees:
Good practice: The firm ensures the consumer is made aware of the fee structure. Good practice can be demonstrated if the consumer clearly understands both the amount they pay, and the amount converted.
Poor practice: The firm has not made it clear to the consumer how much is converted. The FCA highlights that this could result in confusion and consumers sending less money than intended.
- Variable fees
Good practice: The consumer is clearly informed about the fee structure, ensuring transparency in pricing. Additionally, all fees are totalled to provide a clear and comprehensive view of the overall cost. Firms may provide links to additional information to help improve transparency.
Poor practice: Where the consumer is not clearly informed that the firm’s exchange rate differs from the reference rate, it may lead to misunderstandings about the actual cost. Some firms emphasise the absence of a fixed fee which can create the misleading impression that no costs apply to the remittance.
- Third party fees
Good practice: The sender is clearly informed that intermediary / recipient bank fees or taxes may be deducted, helping to ensure the consumer understands that the recipient might receive less than the original transfer amount. Providing links to additional information that helps the consumer understand and estimate costs is also encouraged, however links should only be provided where the information is too complex to be shown on the transaction screen.
Some firms offer the consumer the option of an up-front fixed fee to cover intermediary banks costs. This ensures the recipient receives the intended amount. Where the firm does not know (or is unable to estimate) the amount that the recipient will receive due to intermediary or recipient bank fees, it clearly explains to the customer any additional fees that may apply.
Poor practice: The sender is not informed that intermediary bank fees may reduce the amount received by the recipient, which can lead to unexpected shortfalls.
Next steps:
The FCA expects firms to:
- Review Information Provided: Firms should assess the clarity and comprehensiveness of the information they provide, ensuring consumers can understand costs, compare options, and make informed decisions.
- Implement Improvements: The examples of good and poor practices should guide firms in enhancing their communication strategies to deliver better outcomes for retail customers. While poor practices may not necessarily indicate non-compliance, they highlight areas for potential improvement.
- Ongoing Engagement and Compliance: The FCA will continue to engage with firms to reinforce expectations, identify compliance gaps, and ensure appropriate actions are taken to enhance customer service and support. Future work is anticipated to evaluate the improvements made in this area.
