Queensland man David Cooney could have bought a small car with the $14,000 in charges he incurred from Westpac and Commonwealth banks for moving money to England and back.

In 2013, Mr Cooney went to Westpac to change $357,000 into British pounds, and said the exchange rate he was given cost him $6,000 more than a benchmark Bloomberg rate referenced by big traders.

A few weeks later he had to bring some of his money back to Australia, this time with the Commonwealth Bank, and said the exchange rates cost him another $8,000.

"The least I can expect is that I can send it relatively safely through a bank and I keep most of it intact. I don't lose this huge amount of money remitting it out," Mr Cooney said.

The big banks have again avoided a royal commission, with the Government settling for the much less onerous task of requiring the banks to make an annual appearance before a parliamentary committee.

But in a sign the Government is feeling the heat, foreign exchange bank dealings with small customers are coming under scrutiny.

"No-one should be paying thousands of dollars to move their money, no matter how much money you are moving. Hundreds is starting to look a lot fairer," Choice policy director Erin Turner said.

"Whatever the big banks are charging, they are charging a lot more than everyone else in this market."

However veteran banking analyst Brett Le Mesurier, from firm Velocity Trade Australia, said although the dollar amount was high, in percentage terms it was about 3 per cent, which he said was not unreasonable.

"Of course when you just look at a fee in isolation then you think that's an extremely large number," Mr Le Mesurier said.

"But it needs to be put in the context of the services the bank provides and the level of expenses that are required to provide those services."

How does currency exchange work exactly?

The bank offers two prices: a bid price and an offer price.

When you're changing Australian dollars into British pounds:

You are effectively buying, or bidding for, pounds according to the bank's bid price

You are effectively buying, or bidding for, pounds according to the bank's bid price Customers get a low price for Australian dollars so each pound costs more.

Coming the other way, to convert British pounds to dollars:

You will use the bank's offer price

You will use the bank's offer price The offer price for dollars will be high so customers get fewer for every pound they spend.

It means, the bank buys low and sells high.

The difference between the bid price and the offer price is known as the spread, and the bigger the spread the more profit.

On Thursday's rates, Westpac is offering to buy Australian dollars at 53.5 British pence and sell them at 59.3 pence, a spread of nearly six pence. That compares with a spread of just 0.6 of a penny on the Bloomberg rates.

In other words, the bank can be selling money to small customers at around 100 times more than it pays for it.

"The Bloomberg rate isn't actually available to anyone. It's an aggregation of rates," Mr Le Mesurier said.

In effect it is the median of many of the exchange rates actually being traded, but the reality for the big banks is that when they trade on their own behalf they are not far from the Bloomberg rates.

Choice's Ms Turner said it was a clear sign of a lack of competition.

"It's not just in the currency exchange market. We're seeing it across credit cards, savings accounts, mortgages. Banks are taking advantage of customers. Not giving good deals," she said.

"When you look around and see virtually the same pricing practice across all four of our major banks, there's a big problem here."

Currency dealers vs big banks

In preparing this report the ABC conducted a straw poll of foreign exchange traders in the Haymarket area of Sydney.

It is an area where there is a high number of foreign tourists and students, and therefore a high number of currency dealers.

Five of the six traders the ABC visited were cheaper than the big banks. The only one that was dearer was global bank HSBC.

Having spent thousands of dollars to move his own money, the final straw for Mr Cooney was Westpac's $32 transaction fee.

"It's humiliating. To charge someone $32 at the desk after they just washed their hands of $5,970 in my case, because the bank would not relent on the exchange rate," he said.

Choice said the lesson from Mr Cooney's experience was to shop around outside the banks where there are much better foreign exchange deals to be had.