12 septembre 2019
New rules for the provision of exchange services in the Czech Republic were introduced on 1 April 2019. These rules aim to strengthen consumer protection, and to prevent the abusive practices of foreign exchange offices, particularly those which operate in Prague's historical centre.
The need for greater regulation was highlighted by an increasing number of tourists visiting the Czech Republic. According to the Czech Statistical Office, 21 million foreign tourists visited the country in 2018, 550 000 more than the previous year. The highest number of tourists came from Germany, Slovakia and Poland. The most significant rise in the number of tourists is represented by Chinese tourists, where the number rose by 26.5% to 620 000 in comparison with 2017.
In relation to the right to withdraw:
If a client withdraws from an exchange trade agreement, either of the following must happen:
In relation to fees and information, fees may be charged by exchange offices only for the exchange of coins, cheques or if a client pays with a debit or credit card. However, an obligation to provide pre-contractual information to the client is no longer in place for deposits below EUR 1000.
The Dynamic Currency Conversion (ie the withdrawal of Czech korunas from a bank account denominated in a foreign currency from an ATM machine) is not considered a provision of exchange services, so the above described regulations do not apply.
Generally, the banks providing foreign currency exchange services – such as Unicredit and Moneta Money Bank – have adapted their IT and administrative processes to the new legislation and, for now, continue as usual.
However, as a result of the administrative costs connected with implementing the above regulation, two major banks providing services in the Czech Republic – ČSOB and Raiffeisenbank – have now stopped providing foreign exchange services at their offices. The second reason for their decision may also relate to a decline in demand, as more and more customers and/or tourists use ATM machines for these purposes.
To sum up, there has been little reaction from Czech banks to date, underlining the sector's traditionally conservative approach to new regulations. On the other hand, banks are currently evaluating the financial and administrative impact of the newly-implemented measures; we may see fewer banks providing currency exchange services in the Czech Republic if this analysis shows that it is no longer sufficiently profitable.