According to a new research, the scale of payments and transfers to foreign countries from the UK is very large. An estimated $26.8bn was transferred in 2017 alone as remittances (transfers by non-UK nationals to their home country).
Approximately £4bn was estimated to be ‘lost’ in hidden charges paid by small and medium sized enterprises in 2015. The new regulations are designed to increase the transparency of costs, but they do not impose changes in underlying market practices, such as in costs structures or how long an exchange rate offer remains available to the customer.
A particular issue in the retail FX market is the complexity and amount of information that a consumer needs to understand when deciding whether or not to transact with a particular firm. For example, firms can operate different transaction cost structures, use different exchange rates and can deduct costs from the monetary amount to be converted or from the amount of the new currency to be received. In general, attempts to improve consumers’ abilities to compare and contrast different providers in the financial services sector, especially where information is complex and could be presented in diverse ways, often involves standardisation or defining the minimum amount of information that needs to be presented at the point of sale.
Previous research has shown that providing more information about financial products doesn’t necessarily help consumers make better decisions, so it is vital to test the efficacy of such interventions.
According to the research, on average, people are more likely to shop around where no registration is required and on average, people are more likely to choose the highest received amount where the market exchange rate is the same across all offers (stable). The timestamp and statement have no significant effect.
The research results suggest that people make better choices when they can compare offers across providers that are fixed during the time they are searching. However, in line with previous research, adding further information in the form of a timestamp and disclosure about exchange rates changing did not improve participants’ choices.
According to our understanding:
God is in details. If there is too much information, you should not be intimidated, in some cases it can also be fun, and you may enjoy and benefit from the process. It may be just like assembling a puzzle.
Don’t be afraid to ask, answers can assist you, we are here to assist you, it is your call whether or not to use the information provided, and it is better to keep the information available out there. Confusing or not, people may need more time to adapt to the extra information provided.