Israel bank commission and fees reform from 1st july 08

8/14/2019 Israel bank commission and fees reform from 1st july 08

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What is particularly important to know and to compare?

Every customer should compare prices of the services the banks charge him for his current

account (especially regular operations in the account), the cost ofholding a credit card, the

cost of credit (particularly interest) etc.

The reform will lead to three major changes that will make it easier to compare banks:

The number of fees for consumer services was reduced by about two-thirds as a resultof unifying and canceling fees.

Henceforth, identical services will be given the same name in all the banks. The standard fees (current account, mortgages and credit cards) will be available in a

format that makes it easier for customers to check and compare them.

How can I examine the activity in my account?

Customers are able to examine the nature of their banking operations (and especially their

current-account transactions) by checking printouts of their account several months

retroactively. Customers will also be able to study printouts for previous periods (which are

also sent to them by regular mail) on the Internet and by means of ATMs that the bank willplace at their disposal.

How can customers unable to perform their current-account activities using the direct

channels avoid paying fees?

According to the reform, consumers who do not hold means to perform their current-account

activities using direct channels, elderly people and disable customers who due to their

disability cannot handle one or more direct channels are able to execute 4 monthly over-

the-counter transaction at the price of direct channel transactions. Make sure to demand

such a discount if you are entitled to it and return your means of performing direct activities

if they are unused.

Recommended examinations that you should carry out on your current account

Pay particular attention to the following current-account services:


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Current operationsboth in the direct channels and the current operations carriedout by a teller.

Cost of credit facilitiesinterest or a fee for granting credit facilities. Cost of credit cardcredit-card fee.

You can find comparisons of fees in these areas, as well as calculators for comparing costs or

forms for carrying out an independent comparison, on the Bank of Israel website:

www.bankisrael.gov.il

Recommended examinations that you should carry out regarding your credit card

Pay particular attention to the following services connected to your credit card:

Credit-card fee - In the wake of the reform, a single monthly fee is now paid forcredit cards - the credit-card fee. You should compare the fee for the credit card

offered by the bank with the fee offered by the credit-card companies for the cards

they issue directly. Customers are not obliged to hold credit cards issued by their bank,

but can directly contact any credit-card company they choose. Check whether any

discounts are given on these fees and based on what criteria.

Deferred-payment fee - for customers who regularly conduct transactions by meansof installments.

Recommended examinations that you should carry out when you take a mortgage loan

When you take out a mortgage loan, pay particular attention to the rate of interest. Make

sure to compare the rates of interest for the loan offered by different banks.

The recommended order of actions in order to achieve the maximum benefit from the reform

1. What are the most frequent actions you undertake? Examine this on the printouts youreceive from the bank, and identify the types of transactions you undertake and their

prices. The comparison form is useful in this respect. To download the form:

www.bankisrael.gov.il


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2. Negotiate with the bank and demand better conditions.3. Examine the prices of these operations in other banks, and assess whether it is

worthwhile transferring your account to a bank that offers better conditions. As part of

the comparison, you should also take into account the rate of interest the bank charges for

credit facilities on your current account.

4. You can obtain an information sheet from the bank that summarizes all your assets in andliabilities to the bank. This sheet is given free of charge twice a year to a customer who

is considering transferring his account to another bank.


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BANK FEES REFORM

Questions and Answers

On July 1, 2008 a comprehensive reform of bank fees came into effect, which will result in aconsiderable decrease in the number of fees the banks will be entitled to charge their

customers for various banking operations. We have assembled the major questions and

answers that emerge from the new reform.

1. What is the bank fees reform?

As part of the new reform, the Supervisor of Banks has formulated a uniform and mandatory

list of banking services for which the banking corporations are entitled to charge fees. The

long list of banking services and the fees charged for them was examined in detail, which

resulted in a new, smaller and far more transparent list.

2. What is the legal background to the reform?

The recommendations formulated by the Supervisor of Banks in the Bank of Israel for

promoting competition in the banking system and for granting various powers for supervising

the prices of banking services, were adopted by a parliamentary investigation committee thatexamined the issue in the first half of 2007. In the wake of the recommendations, the Banking

Law (Customer Service) (Amendment 12), 2007 was passed, which grants powers to the

Bank of Israel and the Supervisor of Banks to consider the fees charged by banking

corporations. Based on the power granted by the law, a complete price list was drawn up,

called the Banking Rules (Customer Service) (Fees), 2008, consisting of a uniform list of

services for which the banking corporations are entitled to charge fees, as well as a basic

price list of fees covering three major areas of consumer interestcurrent accounts,

mortgages, and credit cards. In addition, rules were determined as to how the bank would

inform customers about the fees and the price lists.


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3. What are the powers the law gives to the Bank of Israel and the Supervisor of Banks

as part of the reform?

The major power is to determine a uniform and intelligible list of banking services for

which the banking corporations are entitled to charge fees. The Supervisor of Banks is

authorized to substantially reduce the number of fees. Furthermore, the Bank of Israel has the

authority to intervene in the prices of banking services (on the grounds determined in the

law), as well as to publish comparative data in order to encourage competition in the banking

system.

4. When will the reform take effect?

The reform has been in force since July 1, 2008.

5. What is the aim of the reform?

The reform aims to promote competition in the banking system by increasing transparency in

the charging of fees. The assumption is that allowing customers to know how much they are

paying for banking services and enabling them to compare the prices offered, will encourage

them to negotiate for improving the conditions, and, if necessary, to move their account to the

bank that offers them the best conditions. Intensifying competition will lead later in the

process to improving the conditions offered to customers.

6. What are the major changes that will take place in the wake of the reform?

The reform will bring about four major changes:

The number of fees for consumer services will be reduced by about two-thirds as a resultof unifying and canceling fees.

Henceforth, identical services will be called by the same name in all the banks. The method of calculating the fees will be identical in all the banks. Price lists for the standard fees (current account, mortgages and credit cards) will be

available in a format that makes it easier for customers to check and compare them.


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7. What will be the major changes in the current account?

Prior to the reform the current account included 15 regular operations, for each of which a

different fee was charged. After the reform only 2 fees will appear in the price lists for all

current operationsa fee for operations in the direct channel (current account operations

executed independently by the customer by means of the Internet, computerized answering

service or ATMs) and a fee for operation by means of a teller.

Note that operations such as making a deposit in an account or withdrawing money from the

account, receipt and repayment of a loan, buying and selling securities - are not regarded as

fees for operation by means of a teller, even if they are executed at a branch.

In the wake of the reform, only two types of operation will appear in the current-account

printout: operation in the direct channel and operation by means of a teller, and the two

different fees that will be charged for these operations. Customers whose accounts are fairly

inactive are likely to find themselves paying the minimum administrative fee that the bank

determines in the price list.

8. What are the major changes in credit facilities?

Prior to the reform two fees were charged for credit facilities (in addition to interest)a fee

for compiling documents and a fee for credit allocation. As part of the reform, the fee for

compiling documents will be cancelled, while only customers who did not make use of

their credit facilitieswill be charged the credit allocationfee.

9. What are the major changes regarding loans?

Prior to the reform two fees were charged for loans (in addition to the interest-rate of theloan) - a fee for compiling the credit documents and a loan collection fee. In the wake of the

reform, the fee for compiling the loan documents (excluding housing loans) will be

cancelled up to the sum of NIS 50,000, and the loan collection fee will be cancelled.


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10. What are the major changes regarding credit cards?

Prior to the reform, the cost of holding a credit card was covered by 3 fees - a monthly

management fee, an annual fee for limitation of responsibility and an annual membership fee.

In the wake of the reform, the credit-card companies will charge a single management

fee, knows as a "monthly card fee." The fee will be collected monthly. Discounts and

exemptions from payment of the fee will be given by the credit-card companies on a monthly

basis, according to the criteria they have determined.

11. Will the fees be cheaper as a result of the reform?

Even though the aim of reducing the number of fees was not, in itself, to lower the prices of

banking services, the banks already expect losses in income from fees of millions of shekels

as a result of the reform. These losses imply a saving for the customers. Furthermore, in the

longer term, the increased awareness of the prices of banking services, in conjunction with

consumers' willingness to compare and negotiate with the banks about the conditions they

will receive, could lead to a reduction in prices of these services for private customers and

small businesses.

12. To which customers does the reform apply?

The reform applies to any customer who is regarded as an "individual customer", as well as

to corporations defined as "small businesses".

Individual customer:

An individual customer is any private customer, as opposed to a corporation (even if the

customer is a licensed dealer).

Small business:

A "small business" is one of the following:

1. Representatives of a jointly-owned residential building.2. A corporation that has been in existence for less than a year.3. A corporation that has submitted an annual report to the bank, according to which its

business turnover in the year prior to submitting the report does not exceed one


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million NIS for the period of one year commencing from the month following the date

on which it submitted the above report.

Excluded from this category are a corporation established by law, and a company all of

whose shareholders are corporations that are not a "small business".

13. What is the complete price list of fees?

The complete price list is a uniform and intelligible list of the services for which the banks

are entitled to charge fees as determined in The Banking Rules (Customer Service) (Fees),

2008. The complete price list of fees applies to any "individual" customer and to any

corporation that is a "small business" whose scale of business does not exceed one million

NIS a year. The banks must ensure that the complete price list is available for customers to

study in their branches and on their website.

14. What are basic price lists?

Banks offer many services. Most customers, however, use only a limited number of regular

bank services. These limited services have been assembled in basic price lists dealing with

three major subjects: current accounts, mortgages, and credit cards. The basic price lists are

derived from the complete price list of fees.

The basic price lists are available to customers at all the branches of a bank, on the bank's

website, and from ATMs that the bank places at its customers' disposal. The customer can

receive the basic price list from the banking corporation at the time of obtaining that

particular service.

15. In the wake of the reform, have the banks canceled the benefits they offer to

customers?

Some banks have informed the Supervisor of Banks that in general they will continue to grant

benefits and discounts on fees to various customers and population groups such as soldiers

and students, and will continue to honor specific agreements signed with their customers

prior to the reform regarding discounts on fees.


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16. Have any fees remained under price control?

The following fees have remained under price control even after the reform?

Name of Fee Comments / Fee

Price of a regular check book This refers to the regular, familiar check book. The price of each

check is limited to NIS 0.36.

Information card This fee is charged when the customer receives from the bank, at his

request, a card used only to extract information. This fee is limited to

NIS 8 a year.

Administrative fee for a

housing loan

This is a fee charged to borrowers who took a loan from the bank for

purchasing a home. The fee is charged each month in conjunction

with the current monthly payment for repaying the loan. This fee is

limited to NIS 2 for each current payment for each home-purchasingloan.

Agreement to create a lien

with another bank (including

an equal lien)

This is a fee that the bank charges when a customer who has

borrowed money from the bank against a lien on the asset, requests

that the bank agree to another bank placing a lien on the same asset.

The need for a lien with another bank arises, generally, when the

customer is interested in taking out a further loan from another bank

by having a lien placed on the asset, or when the customer is

interested in replacing the loan he took from the bank with a cheaper

loan from another bank. The fee is NIS 150.

Transferring securities to the

same customer's depositaccount in another bank

(including the customer's joint

account with his or her

spouse)

These are cases in which the customer requests the transfer of

securities from an account in one bank to an account in another bank.These cases also include transferring securities from an account

registered in the name of a customer to a joint account in which the

customer is only one of the partners. The maximum fee that can be

charged for the service is NIS 5, plus the reimbursement of expenses

incurred by the banking corporation toward a third party (e.g. the

stock exchange or an overseas broker) for executing the service.

Transferring foreign currency

in Israel to the same

customer's account

This fee is charged for a bank transfer of foreign currency from the

customer's account in one bank to his account in another bank.


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BANK FEES REFORM

TEN SUGGESTIONS FOR REDUCING FEES

1. Check the nature of the activities in your current account. You can obtain a recordfrom the bank of your assets and liabilities, twice a year, free of charge, to enable you to

check the profitability of transferring your account to another bank.

2. Compare the conditions offered you by the bank that handles your account and byother banks.

Demand to receive the benefits and discounts you are entitled to by virtue ofbelonging to a sector or population group that receives benefits from the bank.

Negotiate over the conditions of administering your account, and request discountsand benefits for fees and interest payments.

Examine the profitability of transferring your activity (partly or fully) to anotherbank. Remember, the cost of closing an account and moving to another bank is

limited to a ceiling of NIS 40 for an account and an additional NIS 40 for your credit

card, (and any third-party payments there might be).

3. Perform your current-account activities using the direct channels. Authorized debits,standing orders, drawing checks, and drawing information from the ATM are all regarded

as direct-channel actions. Use the ATMs, the Internet and the computerized answering

service for other operations.

Remember. Operations such as making deposits or drawing from them, obtaining

and repaying loans, purchasing and selling securities - do not entail a teller fee, even

if they are carried out in the branch.

4. If you have the means for executing actions directly (information/withdrawal card,cash/credit card) and you don't use them, return them and you can obtain a reduction

in the teller fee.

5. Compare the cost of the credit card you hold with the cost of other credit cardsissued directly by credit-card companies. Remember, there is no obligation to hold the

credit card issued to you by the bank that handles your account.


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6. Examine the possibility of concentrating credit-card payments. You will only pay afee once for your monthly credit-card debt. Therefore, concentrating the authorizations

and paying by credit card could help you to save bank fees.

7. Check the monthly bank fee on your credit card, all the more so if you have morethan one credit card. Remember, discounts on fee payments for credit cards are given to

customers according to the volume of activity on the card.

8. Examine whether it is worthwhile to hold more than one credit card. If you haveinactive credit cards, return them to the issuer and save fees.

9. Avoid splitting transactions unnecessarily.Some services include a minimum fee foreach transaction (foreign currency, securities etc.).

10.Examine whether it is worthwhile splitting credit-card transactions intoinstallments. Since a fee is charge for each payment in installment transactions, splitting

the transaction into installments for small purchases could be unprofitable.

A few more tips

When you make comparisons, the following might be useful:

Basic price lists - can be obtained at any bank branches and in it's website. Form for comparing the administering of current accountscan be found on the

Bank of Israel's website: www.bankisrael.gov.il

Information and comparisons to be published by the Supervisor of Banks on the Bankof Israel's website: www.bankisrael.gov.il

Make sure to always check:

Whether you are entitled to benefits and discounts by virtue of belonging to populationgroups that the bank exempts from fees, or provides a discount.

Whether the bank will be prepared to offer you better conditions from those that appearin the price list

Always check the rate of interest:

On depositsremember, you can also make a deposit in another bank (and not only inthe bank that handles your current account). The cost of transferring money has been


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significantly reduced in the wake of the reform, and is equivalent to one operation in the

direct channel. Compare which bank offers you the highest interest.

On credit facilitiesthe fees for credit facilities have been cancelled. All that remains isto compare the rate of interest.

On loansthe fees for loans up to NIS 50,000 have been canceled. All that remains is tocompare the rate of interest.


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THE BANK FEES REFORM

Guide: How to change banks in the most convenient way

The bank fees reform, which went into effect on July 1, 2008, enables customers to

obtain all the relevant information regarding the fees charged by the banks, to compare

them, and to decide which bank should handle one's account. In order to encourage

competition between the banks, the Supervisor of Banks has also tried to ease, as far as

possible, the process of closing a customer's account in a bank and transferring his

banking activities to another bank.

In the wake of the reform, customers will now know the cost of each bank service, and can

compare the prices offered by the banks or other bodies providing the same service. With this

information at their disposal, customers can request to be charged discounted fees at the bank

handling their account, or if necessary, even transfer their account to another bank if it pays

them to do so.

If you have decided to change banks, this guide will enable you to make the transition

between the banks in the easiest, fastest and most profitable way.

The guide contains information on two major subjects:

1. The orderly process of closing an account or transferring activity from one bank toanother :

Transmitting complete information about the customer's account in the bank. Avoiding the need for superfluous trips to the bank. Executing the actions by the bank to which the account is transferred. Transferring some activities to another bank.

2. Limitations on bank fees charged in the process of closing an account and transferringbanking activity.

For further information on the subject, you may consult Instruction 432, which deals with the

closing of accounts or the transfer of activity to another bank.


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THE ORDERLY PROCESS OF CLOSING AN ACCOUNT OR TRANSFERRING

ACTIVITY TO ANOTHER BANK

Submitting full information about the customer's activity

In order to assess your financial situation in the bank, and to weigh up whether it is

worthwhile transferring your account to another bank, you are entitled, twice a year and free

of charge, to request from the bank written information detailing all your assets in and

liabilities to the bank and the costs of early repayment, your credit facilities, fees that were

charged to your account in advance, the existence of a power of attorney on the account, etc.

The bank is required to issue the information form within four business days of your request.

It is recommended to request the form prior to making the decision to move to another bank,

because the form will help you:

To assess whether it is worthwhile to transfer your activity (fully or partly) to anotherbank.

To obtain a clear and comprehensive list of issues that you have to deal with prior toclosing your account.

To present your financial situation so that the banks you wish to transfer your accountto can assess your position and the conditions they will offer you.

Avoiding the need for unnecessary visits to the branch

In order to limit as far as possible the need to return repeatedly to the bank branch as part of

the process of closing your account and transferring it to another bank, you should do the

following:

Ensure that you have given explicit instructions to the bank concerning the actions tobe taken regarding all the assets and the liabilities that were detailed in the information

sheet you received. At the time of issuing the instructions to the bank, you can include

future instructions (for example, to transfer the sum obtained from the future payment

of a deposit to your account in the new bank).


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Request the bank to let you sign a form enabling you to issue instructions by telephoneor by fax, as opposed to having to return in person to the branch.

Actions to be undertaken by the bank to which you have transferred your account

The bank you have chosen to transfer your account to is entitled to undertake, on your behalf,

as requested by you, the following actions:

Inform bodies that transfer credits to your account (National Insurance Institute, anemployer) of the new account to be credited;

Inform bodies that are authorized to debit your account (Israel Electric Corporation,cellular telephone company, Bezeq, etc.) of the new account to be debited;

If you request the new bank to issue a new credit card, the bank is entitled to informall the bodies that debit your account by means of the credit card for continuing

transactions (for example, a newspaper subscription) of the details of the new credit

card to be debited.

Note:

If requested by you, the bank to which you have transferred your account is entitled to

execute any action for you, on condition that you submit a power of attorney to the bank in

which you authorize it to execute on your behalf any actions that involve transferring the

activity, including managing contacts with the bank in which you have closed your account.

These actions are conditional upon the bank's agreement to act in this way on your behalf.

Transferring some of the activities to another bank

In certain cases customers request that only some of the activities in the bank be transferred

to another bank.

Note:

You are entitled to transfer part of your activity in the bank to another bank, such as only

your current account or investment deposits in another bank; to obtain loans from another

bank (not the bank in which your current account is held); or obtain a credit card issued

directly by the credit-card company and not by the bank handling your account.


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In these cases, if you are interested in transferring only the current activity from the account,

the Supervisor of Banks' instruction provides a solution to the major problems that could

make the transfer more difficult. For example:

Current accountin addition to the above contents of the guide, if you transfer thecurrent activity but the account remains open because of a loan or a deposit or credit-

card debits or post-dated checksthe account will be known as an "exchange

account" on which current-account fees will not be charged.

Deposits and loansthe bank is obligated to enable you to repay loans throughanother bank account, on condition that there is sufficient collateral against the loans.

The bank is obligated to transfer a paid-up deposit directly to your new bank account.

Credit cardsthe credit-card company that you requested to issue you a new card isentitled to inform all the bodies that debit your account by means of the credit card

for continuing transactions (for example, a newspaper subscription) of the details of

the new credit card to be debited.

LIMITATIONS ON FEES IN THE PROCESS OF CLOSING AN ACCOUNT AND

TRANSFERRING ACTIVITY

The overall fees for the transfer of activity to another bank because of the closure ofan account are limited to a ceiling of NIS 40 (excluding early repayment fees and

bank expenses such as a payment to a third party).

The fee for the transfer of activity on a credit card because of the closure of anaccount is limited to an additional NIS 40.

These costs are anchored in the Banking Rules (Customer Service) (Fees), 2008.


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Subject to the ceiling detailed above, the following are the fees for operations at the time of

closing an account and transferring activity to another bank:

The Service The Fee

Canceling an authorization for

debiting an account or a standing order

In the case of cancellation of an authorization to debit an

account or a standing order, prior to the presentation of at least

6 debitsthe banking corporation is entitled to charge a

minimum fee of 6 transactions in the direct channel

Bank transfer The operation fee in the direct channel or operation by a teller,

according to the channel in which the operation was executed

Returning post-dated checks to the

depositor

The fee for returning post-dated checks to the depositor in the

wake of closing an account, will not exceed NIS 5

Transferring securities to the same

customer's account

NIS 5 plus the actual expenses of executing the operation

Transferring foreign currency to the

same customer's account in another

bank

The fee for transferring foreign currency to the same

customer's account in another bank in Israel following closure

of an account, will not exceed NIS 10


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BANK FEES REFORM

Moving from one bank to another FAQs

What do I have to do to move to another bank?

In order to move to another bank, the customer needs to do the following:

1. Obtain an information form from the bank about transferring one's current account;the form includes a record of all your assets in and liabilities to the bank.

2. Examine the conditions available for you at other banks for handling your account,and choose the bank that offers the best conditions.

3. Submit all the instructions to your bank regarding your accounts and your activities,including future instructions, and carry out all the directives detailed in the

information form in order to close your account.

4. Sign an authorization to execute transactions by telephone with the bank handlingyour account, so that if necessary the bank can execute your instructions without the

inconvenience of having to return repeatedly to the branch.

5.

Request the new bank to undertake the following actions:! Inform bodies that transfer credits to your account (National Insurance Institute,

employer) of the new account to be credited;

! Inform bodies that are authorized to debit your account (Israel ElectricCorporation, cellular telephone company, Bezeq, etc.) of the new account to be

debited;

! If you request the new bank to issue you with a new credit card, the bank caninform all the bodies that debit your account by means of the credit card for

continuing transactions (for example, a newspaper subscription) of the details of

the new credit card to be debited.

OR

! You can submit a power of attorney to the new bank, if the new bank agrees, inwhich you authorize it to execute on your behalf any actions connected to

transferring the activity, including contacting the bank in which you have closed

your account.


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The process of transferring your account to another bank:

In the Bank in which Your Account is

Handled

In the New Bank

Ask for the complete information form

Sign:

!A request to close your account!All the instructions, including future

instructions, for executing the process of

closing your account

!Telephone instructions form (to be on thesafe side)

Check the conditions offered, and choose the

bank you would like to handle your account;

the information form might be of help.

Sign a request to open an account:

Ask the bank to execute on your behalf:

!The transfer of authorizations to debityour account

! Inform institutions that credit youraccount

!The transfer of instructions to your newcredit card

The process of transferring your account with the help of a power of attorney (with

your agreement and that of the bank).

In the Bank in which Your Account is

Handled

In the New Bank

Ask for the complete information form

Sign a request to close your account

Check the conditions offered, and choose the

bank you would like to handle your account;

the information form might be of help.

Sign:!A request to open an account!A power of attorney(Based on the power of attorney, the new

bank will handle the closure of your

account on your behalf)

Can I transfer only some of my banking activities?

Yes.

You can transfer:

! Your current account;! Investment deposits, or you can take out a loan in another bank (not the bank that

handles your account) because the other bank offers you better conditions;

! Your credit card directly to a credit-card company.


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Who do I approach in order to move to another bank?

You should approach the bank that handles your account in order to obtain the information

form for moving to another bank. When you receive the form you should approach the bank

you have chosen to handle your account.

How long does it take to obtain the form detailing all my assets in and liabilities to the

bank?

Within 4 business days the bank is required to provide any customer who is considering the

possibility of moving to another bank, with a form detailing all his assets in and liabilities to

the bank.

How much does it cost to move to another bank?

The fee for closing a current account and transferring a customer's banking activities to

another bank is limited to a ceiling of NIS 40 (excluding early repayment fees and expenses

incurred by the bank, such as payments to third parties). An additional fee of NIS 40 may be

charged for transferring credit cards from your account.

Israel bank commission and fees reform from 1st july 08

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Transcript of Israel bank commission and fees reform from 1st july 08