It has been revealed that Lloyds is charging its small business customers, hidden fees on foreign exchange deals as they are considered to be “less sophisticated” than other clients. Guidance to foreign exchange traders advises them to charge small and medium-sized business, with sales of up to £25m a year, and 'Added Value' charge of up to 1.5 per cent per trade. This is not disclosed to the client, and can be increased if approved by a manager.
The guidance says, “AV can be achieved on a discretionary basis, taking into account the services and intellectual capital afforded to the client. Small corporate clients will generally trade in low volumes and margins will be, in general, higher than those charged to financial institutions. In highly competitive markets, were clients are sophisticated, highly price-sensitive, with minimal requirement for market colour, AV may not be charged. Where AV is charged, for smaller, less sophisticated customers, it is limited to a set level.”
“I thought we were getting the best rate, and if I didn’t think we were, I would have gone somewhere else,” a founder of a property company with overseas investments said. The revelation comes at a bad time as big banks still recover from a series of scandals, including the mis-selling of personal protection insurance, libor-rigging and manipulation of exchange rates.
