Felix's bank didn’t clearly explain how exchange rates work and he didn't understand the transfer he'd set up, leaving him short of cash.
What happened
Felix phoned his bank about transferring euros to a bank account he held overseas. He asked whether he’d get the market exchange rate and whether he’d have to pay other costs or commission.
But when the transfer went through the next day, the exchange rate was worse than he’d expected. He was several thousand pounds short of what he’d thought he'd get. So he called the bank.
He queried the exchange rate used, quoting rates offered by other financial service providers. His bank checked what had happened and called him back. It said it had applied the right exchange rate.
Felix was unhappy with this and brought his case to us.
What we said
We spoke to Felix and his bank to find out more about what had happened. We also listened to call recordings of the conversation Felix had had about transferring the euros.
In the call, the bank’s employee sounded nervous and a little unsure about what he was saying. But he did say that, because markets were closed at the time of the call, the exchange rate could change the following day. He’d also told Felix that he had until midnight to cancel the transfer if he wished and was welcome to call back the next day.
Felix agreed to this. But it was also clear from listening to the call recording that Felix hadn’t completely understood what the bank’s employee was telling him. For example, he seemed confused about ‘market rates’ and the bank’s exchange rate, and appeared to think they were the same thing.
The bank’s employee didn’t explain things well and when he read out amounts of euros and pounds, he confused pence with cents.
That meant that Felix thought he’d arranged a transfer for the next day at that day’s market rate. In fact, he’d agreed to the transfer going out the next day at the bank’s exchange rate, which was fixed at the time of the phone call.
The bank hadn’t given Felix the clear information he needed when he needed it. So we thought about what Felix might have done if he’d had the right information.
It wouldn’t have been possible for Felix, as a consumer, to get the same exchange rate that the banks get. So we couldn’t use these rates to calculate what he’d lost. We thought that if Felix had had the right information, he’d have delayed transferring the money.
However, the rates changed overnight and, if he’d have done that, he’d have lost more money than he did.
We also couldn’t ignore the fact that Felix had agreed to the transfer, so the bank was carrying out his instructions.
For these reasons, we didn’t think the bank had been wrong to transfer the money at the rates it used. But we acknowledged that it had given Felix poor service. We told Felix’s bank to pay him £500 compensation for the distress and inconvenience Felix had experienced.