Yet another reason to trust your bank has emerged after a study showed high street banks are ‘overcharging’ property investors buying overseas to the tune of £4,000 for every 200,000 Euros they exchange.
The Euro price was selected because this is the average price of a property in rural France, where many UK buyers are investing.
The banks’ strategy was exposed in a mystery shopper exercise carried out by foreign exchange broker Foremost Currency Group.
Foremost called four major high street banks and three brokers in a 15-minute window on the same day, so the results were not skewed by currency market fluctuations.
| Bank | Rate | £ Spent | Transfer fee |
| Barclays | 1.1430 | 174,978.13 | £15 – £25 |
| NatWest | 1.1371517 | 175,878.03 | £10 – £27 |
| Abbey | 1.1078 | 180,538 | £9.50 – £19.50 |
| HSBC | 1.10 | 181,818.18 | £10 – £30 |
| Bank average | 1.1219 | 178,303.09 | £18.25 |
Credit: Foremost Currency Group
The same costs from four brokers, including Foremost averaged:
| Rate | £ Spent | Transfer fee | |
| Broker average | 1.1480 | 174,211.47 | £3.75 |
Credit: Foremost Currency Group
The figure shows an overseas property investor is paying £4,000 more for no extra service or benefits by going to a high street bank for foreign exchange rather than a specialist broker.
Robin McEwen, Foremost Currency Group managing director said: “Overseas property investors know that the quick returns characteristic of the late 90s and the ‘00s are a thing of the past, for the time being at least.
“Investors on tight budgets taking a long term view are returning to the market and financial institutions should be encouraging them to do so. By taking such a large margin on foreign exchange the high street banks are doing exactly the opposite.”
Recently the same banks and other UK banks have been criticised for extending mortgage margins to make more money from borrowers even when interest rates have been at their lowest ever.
Banks are also under fire about bonuses and stockpiling government cash to protect their balance sheets instead of lending to business.
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