Czech gov't approves new currency exchange rules

A pending amendment would allow tourists some time to get their money back

The Czech government has approved some changes to the rules for exchanging money, and these will benefit the public. Most importantly, people will have a chance to get their money back if they discover the deal was unfavorable.

The amendment to the Foreign Exchange Act still needs to pass both houses of Parliament and be signed by the president. If it passes, it will take effect three months after its publication.

The poor state of regulation of exchange places has been an ongoing issue that gives Prague a bad reputation. This issue has been brought to light recently in a widely watched series of videos by Janek Rubeš, who posts on YouTube under the name the Honest Guide. He has been calling for the government to take action, and for people to be more aware of the pitfalls.

Prime Minister Andrej Babiš (ANO) says the amendment should help fix the problems.“I think that this change will definitely help to improve the reputation of our country and, above all, the capital of Prague, for tourists,” Babiš said on the government website.

The good news for tourists and also for locals planning a trip is that exchange customers will have the right to withdraw from a transaction of up to € 1000 within two hours of exchanging money. This will allow people some time to do the math after the exchange and realize what the actual rate was. Clients must also be informed of the new amendment.

Currently, once a customer accepts the money and finds out the rate was not favorable, there is no recourse.

In case the exchange office closes or the customer becomes sick, the customer has six months to address the situation.

There are also new rules in the draft amendment for people who exchange money using a bank machine. These customers have three business days to go to a physical office of the machine's operator. This is to discourage exchange offices switching from physical clerks to an automated system to get around the law, Finance Minister Alena Schillerová (for ANO) said in a press release.

Rules of advertising multiple exchange rates will also be tightened. VIP rates can no longer be advertised at the exchange booth. Only one rate can be posted.

The new protections cover up to € 1,000 the prevent currency speculation. Some 90 to 95 percent of exchange transactions should be protected, though, as they would be under the limit.

The Ministry of Finance drafted the changes. “It is no secret that the practices of some exchange offices, especially in the center of the capital, do not give the Czech Republic a good name. On Old Town Square, a tourist can get Kč15 for a euro or be a charged 28 percent fee,“ Finance Minister Schillerová (for ANO) said.

“Unfortunately, it appears that customers are not always guided by mandatory disclosures. In addition, the complexity is often deliberately aggravated by various VIP offers. The disadvantageous exchange can be noticed by customers afterwards, which, in the case of tourists, can ruin the rest of the holiday and also ruin the overall impression of a visit to our country,” Schillerová said.

The amendment also restricts the right to demand payment for the exchange transaction, such as a commission fee. The payout can only be based on the exchange rate. Customers should be able to compare the rates and not have to calculate hidden fees to find out how much they will get.

Fees can only be charged for exchanging coins or cashing checks.

The Ministry of Finance has consulted with all concerned entities, including the Czech National Bank, on the draft amendment. Changes to the draft are possible before it is passed.

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