The Australian Competition and Consumer Commission (ACCC) announced on Tuesday that it is looking into price competition among institutions that provide currency conversion services, including the main four banks in the country. The inquiry also aims to investigate the ability of new entrants being able to compete in the current market.
In the statement, the ACCC said the inquiry would examine how exchange rates are presented, noting that consumers often struggle to understand and compare the different types of prices charged. This is specifically in relation to the markup that financial institutions charge consumers when converting currencies.
In Australia, currency conversion rates are particularly high. According to the World Bank, Australia is the third most expensive G20 country for consumers and small businesses to send money from. In 2016 alone, Australians sent approximately AU $8.8 billion overseas.
Commenting on the inquiry, ACCC Chair Rod Sims said: “We will be examining why major companies in Australia, including the big four banks, seem to be able to consistently charge high prices… 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.”
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Australia’s Banking Industry yet Again Comes under Fire
This inquiry follows one conducted by the Royal Commission which took a look into the practices of Australia’s largest banks. The findings revealed widespread misconduct and the deliberate deception of Australian consumers.
At the time, the Australian Banking Association said the interim findings represented “a day of shame for Australia’s banks” with “no excuses for the behaviour that has been exposed by the Royal Commission.”
Speaking on the current inquiry, Sims added: “The ACCC will conduct this inquiry with an open mind, but with a view to making recommendations where appropriate.”
The Australian regulator aims to submit its final report by May next year to the Treasurer.