Law gives clients new rights in fight against shady exchange offices
On Monday, a new amendment went into effect which seeks to tackle the shady tactics employed by many exchange offices in the Czech Republic. They include the right of clients to cancel an exchange up to three hours after the transaction, as well as the prohibition of separating the exchange payment from the rate itself.
To tackle this problem, a new amendment to the Foreign Exchange Act was passed by Parliament in December, which went into effect on Monday.
Czech National Bank spokeswoman Markéta Fišerová explained to Czech Radio how customers will benefit.
“Perhaps the most noticeable change will be the new right of a client to cancel the exchange within a time period of three hours after it was made. Furthermore, an important change is the prohibition of publicising specific advantageous rates, which are often termed as so-called ‘VIP rates’. Finally, the amendment also cancels the separate exchange payment. Newly, this should be incorporated in the initial exchange rate itself.”
According to Mrs. Fišerová, the Czech National Bank annually faces 250–300 complaints about exchange bureau practices. She says that this is just the tip of the iceberg, as many of the clients are tourists who never submit a complaint.
If exchange offices refuse to comply with the client invoking his rights, the latter is advised to remind them they are breaking the law. If the client is still ignored, he can secure documentation, either in the form of photographs, witnesses or the payslip and subsequently contact the Czech National Bank.
Asked about whether the move will lead to the end of bad exchange rates, Mrs. Fišerová was unwilling to speculate, but admitted it could hurt extortionate exchange offices.
The Czech National Bank has a webpage which lists the rights and rules for currency exchange clients: www.cnb.cz/en/consumer/consumer_protection/ten_golden_rules_currency_exchange
“What effect the change in law will have in practice is impossible to predict. However, the new right to cancel the exchange is very likely to impact those exchange offices, which, often legally, offer very bad exchange rates.”
When it comes to the right to cancel, clients should be aware that it can only be invoked for exchanges of up to EUR 1000. The subsequent reimbursement by the exchange office must be paid according to the rate declared by the National Bank the previous day.
Not all see the new legislation as beneficial. The Association of Exchange Offices has voiced reservations to the new law in the past and the Deputy Executive Director of the Czech Banking Association Filip Hanzlik said in October that the regulation could lead to the end of bank exchange offices.
