New foreign money transfer protection

10-01-2008

New foreign money transfer protection
People sending cash abroad to friends and family are set to have new safeguards to protect their money.

The Department for International Development (DFID) has established a new charter for the money transfer industry in a bid to stop a repeat of the First Solution crisis.

The firm went under last year losing 2,000 customers, principally in the Bangladeshi community in the East End of London - costing estimated £1.7 million.

It is thought UK residents send some £2.3 billion to families in over 50 developing countries a year – creating a major source of income for these economies.

Some 35 per cent of British ethnic minority households send money abroad – on average £870 a year.

The cost of sending £100 can range from £4 to as much as £40.

Around half of money transfer firms have now signed up to the DFID charter – including Post Office, MoneyGram, Chequepoint, and members of the UK Money Transmitters’ Association.

International development minister Shahid Malik said: "The new charter will give more confidence to people sending money to loved ones abroad by providing better information and transparency.

"By promoting competition and transparency in the remittances sector we ensure a better deal for consumers in the UK and their families, and also help the fight against poverty in the developing world."

The charter commits firms to give clear, transparent information on fees, exchanges rates, time taken for transfers, and what will happen if things go wrong.

Further protection is also set to come to the money transfer sector with HM Treasury consulting on bringing in new regulation.

Some 70 per cent of people sending cash abroad are aged 25 to 44, with almost half money sent to parents, and 15 per cent to spouses and children. A third of cash transferred abroad is used to buy food, 21 per cent for medical bills and 17 per cent to pay for schooling.

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