The competition regulator has launched an inquiry into foreign exchange services for SMEs and consumers, noting that Australia is one of the most expensive places to trade currency.
Many Australian businesses buy or sell in foreign currencies, and money is regularly sent overseas for business and travel purposes.
But ACCC chair Rod Sims expressed concern that Australians may be getting ripped off in the process.
“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,” he said in announcing the inquiry.
“This means that if you send AU$1,000 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.”
As such, the ACCC will begin investigating why these prices are being charged by the major players in Australia, including the big four banks.
This will include exploring the degree of price competition currently at play and any potential restrictions on new players entering the market.
Another core facet of the inquiry will be the presentation of currency prices and whether they are potentially misleading.
It comes after the Productivity Commission’s Report on Competition in the Australian Financial System recommended that the ACCC, in conjunction with ASIC, investigate whether current disclosure methods and practices are effective.
“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,” said Mr Sims.
“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.”
Mr Sims said the ACCC will approach the inquiry “with an open mind” but is looking to make recommendations where appropriate to ensure currency buyers are benefitting from adequate disclosure and marketplace competition.
“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,” he said.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.