If there wasn’t enough grief already in the world of foreign exchange, the latest news emerging from Barclays is likely to cause a new round of complaining and frustration amongst British travellers. According to a recent report, an internal probe within Barclays discovered that the company had been exchanging currency for their customers at incorrect rates between the years of 2005 and 2012. Essentially, customers who had visited the bank during this period in order to exchange domestic funds for various international currencies were likely given less money in return than they had rightfully deserved. Now that the probe has unearthed this controversial information, Barclays has announced that they are setting aside nearly 290 million pounds sterling in order to ensure that they can properly compensate all of those who may have been “short-changed” by this oversight.
It seems as if stories such as this are abundant throughout the foreign exchange industry. Over the past several years, a number of high-profile controversies have occurred regarding the rigging of the wildly frenetic foreign exchange markets and bureau de change locations. In many of these scenarios, banks found guilty of illegal actions in the fx markets are now being sued by their former customers.
It is also important to note that this is not the first substantial monetary loss that Barclays has incurred this year. In May, Barclays was forced to pay a 1.53 billion pound fine due to accusations of fx market fixing. In another recent incident, it was discovered that Barclays employees were verbally offering customers less than optimal exchange rates on foreign currency and then keeping the difference between their stated rate and the actual exchange rate at the time.
According to David Buik, a broker with Panmure Gordon, the fact that Barclays has taken the initiative and announced this new compensation package for their clients is an attempt to minimize the fallout from the situation at large. Transparency has also been an issue in the fx markets, and yet, in recent years, it seems as if bureau de change locations and other foreign exchange services have developed a particular dubious reputation. It will be very interesting to observe what, if any changes will be made in both the short and near future to ensure that these types of problems are properly dealt with before they become a public grievance. If banks such as Barclays are to preserve their relationship with the general public, scandals such as this must come to an end as soon as possible.