The UK's Financial Conduct Authority (FCA) has moved forward in its efforts to keep a check on misleading currency transfer services which promise unrealistic exchange rates.
Image: FCA building in London. Photo: courtesy of FCA.
The financial watchdog has published a consultation paper in this regard to improve conduct and communications in payment services and e-money companies.
According to the FCA, its consultation paper offers to extend the application of the Principles for Businesses and some specific rules pertaining to promotions and communications.
The proposals are to make sure that the rules cover broader categories of businesses regulated by FCA which includes businesses authorized or registered under the Payment Services Regulations or the Electronic Money Regulations.
As far as currency conversion services are concerned, the financial regulatory body first indicated its plans in June 2017. This was after coming to know that several companies have currency conversion tools which convert currency at the interbank rate, thereby offering consumers the false impression that the rates displayed are available to them.
FCA said that the measures it has proposed in the consultation paper will assist customers to better understand the standards expected by it from the firms. Further, they will also make it easier for the regulator to intervene when it senses anything dubious.
The FCA said that its disciplinary powers under FSMA would apply to violations of the proposed new rules, including the ones that relate to marketing and communications. The organization believes that this would reinforce the effectiveness of its enforcement approach in the markets for both payment services and electronic money.
FCA strategy and competition executive director Christopher Woolard said: “This is a measured intervention – for many it will simply reflect current good practice and ensure that they are subject to the fundamental obligations that we expect of regulated firms.
“For some, however, it should be a clear signal that through our rules, supervisory and enforcement action, we will not tolerate customers being misled or being treated unfairly.”
The FCA is now awaiting comments on the proposals it has outlined in the consultation paper with the last date being 1 November, 2018.