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BOQ exchange rate margin costs customer thousands

Processing a foreign transaction through your bank is rarely a good idea, as a Bank of Queensland customer recently found out.

Last updated: 24 May 2022


Checked for accuracy by our qualified fact-checkers and verifiers. Find out more about fact-checking at CHOICE.

Need to know

  • The Cahills’ US bank cheque took more than nine weeks to clear and be credited to their account 
  • When it did, they learned that the Bank of Queensland (BOQ) had used Travelex to process the transactions – at a terrible exchange rate 
  • BOQ acknowledges that making an electronic international money transfer would have worked out much better for the Cahills 

Garry Cahill and his wife Shane recently paid a high price for trusting their bank to handle a major foreign exchange transaction. 

The retired couple had sold a pickup truck and caravan in the US that they'd used for an extended road trip across the country. They returned to their home in Townsville, Queensland, with a US bank cheque for US$31,876. 

They deposited it in their Bank of Queensland (BOQ) account on 9 February, when the official RBA exchange rate put the Australian dollar at about 71 US cents. 

At that rate, their US dollars would have been worth about AU$44,895. 

As a rule, though, banks and other foreign exchange services factor a profit margin into official exchange rates, meaning the Cahills would have received perhaps a few hundred dollars less – if the margin were reasonable. 

(On 10 May, the RBA exchange rate was about 70 US cents per Australian dollar. On the same day, the BOQ exchange rate was about 74 US cents per Australian dollar on its travel money service – a margin that stretches the bounds of reasonableness, but wouldn't be unusual for a bank.)

Final payout off by thousands 

The exchange rate on the day Garry deposited the bank cheque didn't matter, because it took more than nine weeks to clear. 

When it did, on 14 April, the Australian dollar had climbed to 74 US cents, making the Cahills' US dollars worth about AU$43,075 at the official rate. 

Much to their surprise – and chagrin – the Cahills ended up with just AU$39,629. 

Travelex, a company well known for overcharging customers, then exchanged the US dollars for Australian dollars at an exorbitant rate

Garry Cahill

"Why couldn't the full amount of that cheque have been credited to our account on the day of the deposit but not made available to us until verified?" Gary asks. "The bank's excuse was 'that's the way it's always been done'."

The role of Travelex

But it wasn't just the timing of the cheque's clearance – it was also a matter of who processed and applied the exchange rate. 

That turned out not to be BOQ but the foreign exchange company Travelex, which the bank uses for such transactions. This came as news to Garry. 

"The bank official disclosed that, once cleared, BOQ handed the money to Travelex for the foreign exchange," he says.

"Travelex, a company well known for overcharging customers, then exchanged the US dollars for Australian dollars at an exorbitant rate of one Australian dollar for 80 US cents, thus reducing our estimated AU$44,558.35 down to US$39,629.34. BOQ accepts no responsibility for using such a notorious currency exchange company and now considers the issue finalised."


Garry and Shane Cahill are still waiting for Bank or Queensland to resolve their foreign exchange dispute.

Travelex a poor performer

In a CHOICE review of overseas money transfer services, Travelex was identified as one of the least preferable options.

Yet Travelex's exchange rates were not nearly as bad as the rate applied to the Cahills' transaction, relative to the value of the US and Australian dollars at the time. 

Nevertheless, online money transfer services are almost always a better option than traditional banks. A 2019 report by the ACCC found that people who used one of the big four banks to make an international money transfer of US dollars or UK pounds in 2017–18 could have collectively saved about AU$150 million if they'd used one of these services instead. 

Update 27 May 2022: Following the initial publication of this story, Travelex contacted CHOICE with a request to add comments: 

"Foreign cheques are not widely accepted in Australia, and the process is onerous, time consuming and labour intensive," a Travelex spokesperson says, adding that the cheque cleared within the normal 55 to 80 day timeframe.

"We take all customer complaints seriously and will support any ongoing investigations about this claim. We are working with BOQ to better understand the issue and any remediation steps that can be taken to improve the customer experience and transparency of the process." 

Was the Banking Code followed? 

The Banking Code of Practice says, "if you are an individual that is not a business, we will tell you about a transaction service fee immediately before you incur the fee". 

The Code also says, "We will communicate with you in a timely manner and we will give you information that is useful and clear." 

According to the Code, banks providing foreign exchange services should give customers exchange rate details for transactions like the Cahills', or tell customers where to find such details.


Banks often take advantage of a lack of customer awareness regarding foreign transactions and apply hefty exchange rate margins.

'We were not informed'

But Garry says that he and his wife received no such communication from BOQ during the nine-plus weeks it took the bank cheque to clear. Nor was there any communication regarding the high exchange rate margin applied to the transaction.

"At the initial date of depositing the cheque we were not informed of the fees nor were we advised that the value of the cheque would be that at the date of clearance and not the date we deposited the cheque," Gary says.

We asked the Australian Banking Association (ABA), the industry body that oversees the Banking Code of Practice, if there are any limits on the margins banks can apply to foreign exchange transactions, or any limits on how long a bank can take to clear a foreign bank cheque. 

An ABA spokesperson told us "the ABA won't be available to comment on this occasion".

Update 27 May 2022: Following the initial publication of this story, the Bank of Queensland contacted CHOICE with a request to add further comments, as follows: 

"BOQ confirms it disclosed all relevant fee, processing time, and exchange rate information to the customer regarding the foreign cheque, in line with the requirements of the Banking Code of Practice. We are not in a position to provide further commentary while the matter is before AFCA."

Bank of Queensland: 'We recommend an international money transfer' 

A BOQ spokesperson explained that cheques of more than AU$10,000 go through a special process at the bank, one that appears not to be in the best interests of its customers. 

"Where the value is more than AU$10,000, the cheque will take at least eight weeks to clear as Travelex negotiates for the funds to be released from the foreign bank," the spokesperson says. 

We recommend that where possible, customers request an international money transfer rather than a foreign cheque

Bank of Queensland spokesperson

"Once this occurs, BOQ credits the funds to the customer's account minus a small fee. The exchange rate for the cheque is struck at the time Travelex makes the negotiation with the foreign bank, rather than at the time the cheque is presented to BOQ."

The spokesperson acknowledged that there are better options for customers than depositing foreign cheques of more than AU$10,000 with BOQ. 

"We recommend that where possible, customers request an international money transfer rather than a foreign cheque for the quickest process and to avoid fees.

Case now with the Australian Financial Complaints Authority

That advice comes a little late for the Cahills. 

"We understand the issue about international processes, however this does not excuse the diminution of value of our cheque," Garry says. 

"At our last meeting with the bank, on April 19, they promised to contact Travelex to reconsider if their exchange rate was excessive. Nothing has been heard from BOQ on this matter since."

The Cahills have lodged a case with AFCA which is currently being considered.

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