Finance houses warned on euro

Sixteen financial institutions have been told by the Director of Consumer Affairs that they may not charge different "buy" and "sell" rates for euro currencies after December 31st.

Ms Carmel Foley has issued a directive to this effect under the Consumer Credit Act 1995 to the institutions, which include banks, building societies and bureaux de change. It means that only a commission fee may be charged when changing money from one to the other of the eleven currencies taking part in economic and monetary union (EMU) from January 1st 1999.

At present most financial institutions charge both a commission and a "spread" charge when exchanging currencies. Spread is the difference between the buying and selling rates offered and involves a charge which is often not obvious to consumers. From January 1st 1999, the exchange rates between the eleven currencies participating in EMU will be fixed by reference to the euro.

"In these circumstances the director stated that the notion of a spread or margin for transactions in these currencies was no longer relevant," according to a statement issued by the director's office.

The financial institutions had told the director that commission alone at its present level would not cover the cost of providing foreign exchange services. "The director was adamant, however, that savings arising from the elimination of exchange rate risk must be passed on to consumers".

Ms Foley has told foreign exchange providers that they must publish their current and proposed charges for the most common foreign exchange transactions (ie sale of notes) in the national newspapers this Friday, December 18th and again on Monday January 4th.