§ 2.50 p.m.
§ Lord Ezra asked Her Majesty's Government:
§ Whether they consider that the commissions being charged by British banks on transactions in foreign currencies are too high.
§ The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley)My Lords, the commissions charged by British banks are determined by competition within the industry. The most effective way to reduce commissions is through increased competition, technological change, and co-operation between banks in developing systems for making payments.
§ Lord EzraMy Lords, is the Minister aware that recently I received a dividend to the equivalent value of £42.28 on shares held in a French company and that my clearing bank charged me £20 commission for that transaction? After the payment of UK tax I was left with £5.37. Is the Minister surprised to learn that in my complaint to the clearing bank in question I asked whether it should not have taken the lot and saved the paperwork? Does the Minister not agree that transaction charges of this order are likely to limit the benefits which we could otherwise expect to receive from the creation of a single market? Does he further agree that this is perhaps the strongest case for creating a single European currency?
§ Lord HenleyMy Lords, I offer my commiserations to the noble Lord on the fact that he lost so much money. All I can advise him to do is to shop around and try to find a lower commission rate. The noble Lord asks whether his experience is not a good argument for adopting a single currency throughout Europe. I do not believe that a single currency would solve all the problems incurred in making cross-border payments. Some problems still exist in a single currency area such as the United States of America.
§ Lord BoardmanMy Lords, does my noble friend agree that there are many hundreds of British and foreign banks operating in Britain and that that situation should ensure that the competition to which he referred does occur?
§ Lord HenleyMy Lords, I thank my noble friend for that supplementary question. He is right to say that there is competition between banks and between banks and bureaux de change.
§ Lord Taylor of GryfeMy Lords, does the Minister accept that it might help the Government's prospects if they offered a special discount on transactions involving the hard ecu?
§ Lord HenleyMy Lords, we do not have the hard ecu at the moment.
§ Lord PestonMy Lords, I am puzzled by the remarks made about competition. Is the Minister not aware that all banks seem to offer exactly the same bid and offer prices for retail transactions of this kind? At least that appears to be the case from prices printed in the newspapers. Is the Minister really happy that a small currency transaction will involve a charge of 704 some 6 to 7 per cent. just on the bid and offer price, plus at least another 10 per cent. handling charge? A 17 per cent. charge seems very large for, as it were, ordinary transactions. I could not follow the Minister's argument. Will he explain how, if we had a single currency, there could be any charges for currency conversion?
§ Lord HenleyMy Lords, I said that there would still be problems with cross-border payments. Moving money around is not as simple as all that.
§ Lord PestonMy Lords, I am totally at a loss to understand the Minister's argument. If we are all dealing in the same currency, we simply write cheques in the same currency. Other problems may arise but they cannot possibly be of the magnitude of those that the noble Lord, Lord Ezra, faced. Surely the Minister agrees with that.
§ Lord HenleyMy Lords, I agree with that. I was merely saying that there would still be problems when moving money around.