On certain Lloyds TSB current a/cs they advertise commission-free foreign exchange.

The 'spreads' they use, however, are huge - i.e. last week Lloyds TSB were buying €/£ at 1.40 and selling at 1.5750

This is a huge €0.175 for every pound when the interbank markets that they have access to trade on approximately €0.0005 - a difference by a factor of between 300 and 400 in their favour.

Even by 'back of envelope' calculations this equates to a charge to the consumer of 6.0% on any given transaction.

This is without considering that since high st customers both buy AND sell using these fixed rates throughout the day the traders in head office make this spread automatically and need only trade out of the 'net' positions throughout the day.

Nobody would insist that banks should provide services with no profit incentive - just that they don't advertise something as free and then attempt to trade on their assumption of our ignorance.

VF