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issue 72

September/October 2008

the remittance men

In Victorian times a "remittance man" was an exiled (perhaps disgraced) Briton living abroad on a small allowance sent from home. Today the meaning has completely changed. Modern remittance men are more usually UK-based workers sending money home to their families in countries such as Poland or Bangladesh. Some of this money will be sent through banks, building societies or e-money issuers - but increasing amounts are being sent through other money-transfer agencies, many of which have small high-street outlets. An EU payment services directive, coming into force with effect from 1 November 2009, is intended to provide more of a level playing field between banks, building societies and e-money issuers on the one hand, and other payment-service providers on the other.

We immediately noticed that the complaints-handling provisions of the directive applied only to transactions made in European currencies and within the European Economic Area (EEA). As a consequence, consumers complaining about payments terminating or originating outside the EEA (or in some other currency) would have a different level of protection - depending on the type of payment-service provider they used.

For example, a remittance of £100 sent to Warsaw to be converted into zlotys, would be covered by us in relation to all payment service providers. But we would only cover a similar transfer to Dhaka, for example, to be converted to Bangladeshi taka, if it were transacted by a bank, building society or e-money issuer. And given that our office is based next to the largest community of Bangladeshis outside Bangladesh, we weren't going to overlook that problem - and the difficulties that would arise in trying to explain these complexities of jurisdiction to consumers.

Happily our policy team, working with the FSA and HM Treasury, has found a way to ensure that the Financial Ombudsman Service will be able to cover complaints about all these transactions after the directive comes into force on 1 November 2009. There's no reason to think that this extension of our remit will bring a substantial increase in our workload. But at least we have managed to avoid the potential for much consumer confusion. The playing field in this area will be level, and consumer protection will cover all UK "remittance men" - and women - including some of our closest neighbours here in the London borough of Tower Hamlets.

Walter Merricks
chief ombudsman

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ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.

The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.