Stop the transfer tax rip-off
Labour MP and former Cabinet Minister Tessa Jowell writes about the topic of her Westminster Hall debate today: International money transfer charges.
For most of us Christmas is a traditional time for giving - a chance to help spread a little of our good fortune to the people closest to us. This is especially true of people who have loved ones living in other countries, many of whom need to support their relatives all year round.
There are hundreds of thousands of examples in London of people who work long and unsociable hours doing jobs our city relies on - as cleaners, security guards, nurses, taxi drivers - so they earn enough to help others. As a result of their hard work they are proud to send small amounts a month - £50 here, or £100 there - to relatives abroad. But not all of it arrives. The rest is eaten up in unfair fees and charges - a ‘transfer tax’ on money that can sometimes mean the difference between life and death. These charges apply almost every time someone in the UK tries to send money using the giant international money transfer companies that between them control the market. When people send money abroad to someone in need, they often find that it costs a lot more just to send it - with high fees and opaque foreign exchange rates adding as much as 20%.This ripoff has got to stop - which is why I have requested an Adjournment Debate, to ask the government to step up and protect consumers.
Weak competition, concentration of market power, and badly designed financial regulation all contribute to high charges. Just two money transfer operators, Western Union and MoneyGram, account for two-thirds of remittance transfers in sub-Saharan Africa, in what could be described by some as at best a duopoly and at worst a cartel across sub-Saharan Africa - whichever is correct, it is certainly not competitive. This problem is not new - in 2009 the G8 agreed that fees should be capped worldwide at a maximum of 5%, but they have failed to take the action needed. Charges have actually risen since then - the global average charge is still at 7%, with average fees for sending cash from the UK to sub-Saharan Africa now running at a massive 12%. I’m aware of examples where people are being charged as much as 20%.
Christmas should be a time of giving, not taking. So our campaign is asking that the big international money transfer companies immediately halve their fees in the run-up to Christmas, as a stepping stone to finding a long term solution to bringing charges down to acceptable levels. I’d value your support - please sign the campaign petition at
www.stopthetransfertax.comand urge your family and friends to do the same.
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