09 February 2010
Workers sending cash to friends and family overseas were today urged by the Government to keep their money safe by using formal channels like banks, transfer companies and foreign exchange agencies.
Launching new advice today, International Development Minister Gareth Thomas said up to £2bn – a third of all remittances sent back to friends and family - currently goes through ‘informal’ channels.
Mr Thomas and the Exchequer Secretary to the Treasury Sarah McCarthy Fry today launched new Financial Services Authority “Moneymadeclear” guidance which provides impartial advice for people who send remittances from the UK.
Remittances are a vital source of income in many poor countries, paying for school and medical fees, food and clothing for many families. From the UK, the main developing countries that receive money in this way are India, Pakistan, Nigeria, Jamaica and Ghana.
The FSA ”Moneymadeclear” guidance “Sending Money Safely”, includes practical, impartial advice to enable consumers to make an informed choice on which companies to send money through, what to do if things go wrong and details of a formal complaints procedure.
Gareth Thomas said:
“For many of the world’s poorest families, money sent home by loved ones is the main source of income. Families in the developing world rely heavily on this money for their day-to-day expenses such as food and medical bills.
“EU legislation has recently been introduced to protect people sending money home to countries in the EU. We need to make sure that this sort of protection is now extended to give those sending portions of their wages to developing countries similar security.
“After the earthquake in Pakistan, remittances increased by up to 300 percent and banks and authorities worked together to make it easier for people to send and receive money. We now need to use this model after other disasters such as the recent earthquake in Haiti.”
Sarah McCarthy-Fry, Exchequer Secretary to the Treasury, added:
"Remittances have increased significantly over the last few years and for some they are a vital way of providing financial support to families and loved ones. To support remitters in the UK, it is hugely important that they also have the opportunity to choose from a wide range of financial services and products. "We believe there is a significant opportunity to improve the level of financial inclusion in the UK for remitters, and that is why Government is working closely with industry so that together we can deliver new ways to provide essential and life changing services."
Dan Waters, FSA director, conduct risk said:
"There are hundreds of money transfer businesses in the UK, and choosing one can be a difficult decision for customers. The FSA's Sending Money Safely leaflet gives simple, straightforward guidance which will help customers check out businesses before they hand over any money."
Gareth Thomas will say that in places such as Haiti, which was devastated by last month’s earthquake, many families rely on $150 a month sent in remittances to buy basic necessities. The country receives more than $1.5bn in remittances each year.
Around £4 billion is sent every year through formal channels. Formal remittances are important because they can bring people into contact with other financial services that they would otherwise never have engaged with. For example, if a person receives their remittance into a bank account, it brings them into contact with other financial services such as savings, credit and insurance.
Many people use informal channels such as friends or family to send their money home because it is often cheaper and more convenient, but this process can leave the sender with little chance of redress if anything goes wrong.
In Bangladesh, almost half of all monthly household income can be made up from remittances. In Ghana, they can make up half of the household income.
For further information or to place an interview bid with a Minister contact Stacey Vickers at DFID Press Office on 020 7023 0513 or s-vickers@Dfid.gov.uk or Jonathan Tutton at the Treasury Press Office on 020 7270 5592 or Jonathan.Tutton@hmtreasury.gsi.gov.uk
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