The Australian government has put banks on notice they need to be clearer on fees involved in remitting money overseas, an assistant minister says, after a report showed transfer charges are confusing consumers.
Assistant Competition Minister Andrew Leigh says he has told the chief executives of the big banks that transparency in money transfers is an issue of equity and fairness.
“It’s one thing for banks to make a bit of extra profit from stockbrokers, but it’s quite another thing when banks are making excessive profit from people working an extra shift as a taxi driver in order to send money to family,” Dr Leigh told a meeting organised by money transfer company Wise in federal parliament on Monday.
Dr Leigh said he would continue to press the consumer watchdog on improving remittance services.
Australians transfer an estimated $21 billion (US$13 billion) overseas each year to relatives and these payments often help keep families going in lower-cost economies.
The report by the federal government’s behavioural economics team found “complex” fee structures in international money transfers make it confusing for consumers and harder to compare different services.
Some providers offer “fee-free” services which have no transfer fee, but include a high retail margin on the exchange rate, meaning less money went into the pockets of recipient family and friends.
In the Pacific region, the issue was of “huge importance” with almost 40,000 regional workers in Australia, Lowy Institute research fellow on the Pacific Islands programme Jessica Collins said at the meeting.
“Every dollar counts in the Pacific,” she said.
“If you can get more remittances home that means more food on the table, more kids at school, and more trips to the GP.”
Dr Collins said Fiji received about US$400 million (AUD$602 million) every year, with a significant amount coming from Australia, while Tonga received about AUD$310 million (US$206 million), mainly from Australia.
She said Australia could look at helping Pacific nations with regulation, competition and providing support to other countries to digitalise receiving overseas remittances.
NSW Council for Pacific Communities Chair Mal Fruean said there were three main hurdles blocking the free flow of money, including the speed of sending money over, high fees, and a lack of knowledge about different services among workers.
