Widespread foreign exchange markups are contributing to low trust in banks, with just 22% believing their bank gives a fair deal when sending money abroad, according to research shared by Wise PLC (LSE:WISE).
The forex disruptor disclosed that £180 billion was lost globally in a single year due to these hidden fees, affecting the 42% of Brits who engage in cross-border remittances, with many relying on these funds for vital support.
Wise identified HSBC Holdings PLC (LSE:HSBA) as the highest offender, charging a 3.7% “hidden” markup. This comes despite HSBC’s recent launch of Zing, a product marketed for its fee transparency.
As of December to January 2024, each of the following banks charged a hidden fee:
- HSBC: 3.7%
- Lloyds Banking Group PLC (LSE:LLOY): 3.6%
- Barclays PLC (LSE:BARC) 2.75%
- NatWest, TSB, Santander: 2.5%
Wise accused banks of profiting from “consumer confusion and industry opacity”.
“Barclays and Lloyds Bank nod to transparency by offering a hard-to-find disclaimer that details the hidden fee as a markup, something the other banks avoid,” said Wise.
However, newer banks and providers including Starling and Monzo are “completely transparent about their fees”, as is HSBC’s newly launched Zing platform.
Kristo Käärmann, Chief executive and co-founder of Wise, commented: “For thirteen years, we’ve challenged banks to come clean about their fees. Not much has changed voluntarily.
“Banks still hide their markups and refuse to be transparent, because they believe hiding fees gets customers to overpay. They may be right. Not all people and business owners have the time and desire to calculate the hidden margins they are charged.”
Käärmann said that “the rise of new companies that are open about fees, including Wise, shows the value of transparency”.
“HSBC’s launch of Zing suggests they understand this too - making their refusal to come clean to their existing customers is quite cynical. It’s time banks were transparent about exchange rates, and for hidden fees to finally become a thing of the past.”
Proactive has asked HSBC for a comment.