ACCC to investigate big four banks over currency mark-up
2 October 2018, Written by Business News Australia
The inquiry will seek to understand why Australia is the third most expensive G20 country to send money from.
Australia's competition and consumer watchdog has launched an investigation into the currency conversion mark-ups and transaction fees that make overseas business, travel and remittances more challenging in Australia than in most developed countries.
In an announcement today, the Australian Competition and Consumer Commission (ACCC) said after receiving many complaints about the issue it would examine price competition amongst suppliers and test how easy it is for new entrants to compete.
"The World Bank has reported that Australians sent around AU$8.8 billion overseas in 2016. Yet they also found that Australia is the third most expensive G20 country for consumers and small businesses to send money from," says ACCC chair Rod Sims.
"This means that if you send AU$1000 overseas from Australia, on average you'll pay AU$9 more than if you sent an equivalent amount from the United Kingdom, and AU$23 more than if you sent it from the United States.
"Given the amount of funds Australians remit, these higher charges can amount to hundreds of millions of dollars each year across the economy."
Core to the ACCC's inquiry will be the way prices are presented to customers. The ACCC notes the Productivity Commission recently found that consumers struggled to understand and compare the different types of prices charged for international money transfers.
"We will be examining why major companies in Australia, including the big four banks, seem to be able to consistently charge high prices," says Sims.
"The exchange rate you google is not the exchange rate you get from the big four banks. The difference is known as the 'mark-up', and it's often a big part of the price consumers pay when converting currency.
"Many consumers have complained to the ACCC about these high mark-ups, as well as the transaction fees that often apply on top of that."
The watchdog has released an issues paper today and encourages all parties to provide their views and experiences to the inquiry by 22 October 2018.
"We are keen to hear from consumers, consumer advocacy groups, small businesses, and foreign currency suppliers on their experience on a range of issues, including transparency of pricing, costs, barriers to entry, and other factors affecting competition in the sector," Sims said.
"The ACCC will conduct this inquiry with an open mind, but with a view to making recommendations where appropriate."
The ACCC's inquiry is initiated under Part VIIA of the Competition and Consumer Act (2010) and will afford the ACCC with compulsory information gathering powers. The inquiry has received the necessary approval from the Treasurer of Australia as required by law.
The ACCC is expected to provide its final report to the Treasurer in May 2019.
Business News Australia
Author: Business News Australia