UK: FCA issues statement of objections to 3 money transfer firms

The regulator alleges that between 18 February 2017 and 31 May 2017, Dollar East (International Travel & Money Transfer) Ltd, Hafiz Bros Travel & Money Transfer Limited, and LCC Trans-Sending Limited (including its parent company Small World Financial Services Group Limited) trading as Small World, fixed prices offered to Glasgow customers for transferring money from the UK to Pakistan.

According to the regulator, its provisional view is that the three firms coordinated the exchange rate they offered to customers for converting UK Pounds into Pakistan Rupees when transferring money to Pakistan, and fixed the level of a flat rate transaction fee charged to consumers when making money transfers from the UK to Pakistan via Small World’s services. The regulator confirmed that the alleged infringement by the parties relates to the provision of in-store services only and not to any online services offered by the parties. As a result of these activities, consumers may have been overcharged for sending money from Glasgow to Pakistan.

The regulator disclosed that it has issued a statement of objections to the three businesses. A statement of objections is a formal notice which sets out why and how the regulator thinks that a company it is investigating has infringed applicable competition law. It includes details of the facts on which the FCA relies, its objections, the action it proposes to take, and its reasons for its proposed action.

The Competition Act 1998 prohibits agreements, practices and conduct that may harm competition in the UK. Any business found to have infringed the prohibitions in the Competition Act 1998 can be fined up to 10% of its annual worldwide group turnover.

The findings by the regulator are provisional and may not lead to further enforcement action. The parties now have an opportunity to respond to the allegations by making written and oral representations following which the regulator will decide whether the law was broken.

The statement of objections will not be made public, however the regulator advised that further details of the alleged offending will be made public when a final decision is made.

This is the second statement of objections issued by the FCA since gaining its concurrent competition law powers. That it concerns the alleged coordination and fixing of exchange rates is consistent with the focus of UK competition authorities more generally in relation to fee fixing. This underlines the importance for businesses operating in the financial services space of understanding the law and how it applies to them. Not only are businesses accused of infringing competition law subject to potential fines, but individual directors may also be disqualified from acting as directors of any company for up to 15 years. The onus is on businesses to assess their practices and ignorance of the law is not a defence. The FCA has been open about the fact it has a good pipeline of competition cases and the CMA is also still investigating companies operating in the sector.

For more information contact Bridget Chamberlain and Dr. Saskia King.

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