The Bank of Israel announced on Wednesday that it would put basic checking accounts under price control, setting the fee at NIS 10 per month.
The price control only affects a new set of basic checking accounts that banks will be required to offer starting April 1, 2014, as a 2008 amendment to the banking law mandating that all banks must offer “basic” and “extended” checking accounts goes into effect.
The basic track must offer customers access to one teller-executed activity and up to 10 customer- executed activities per month.
The expanded track, for customers who need to perform higher levels of transactions, will provide 10 teller-executed activities and up to 50 customer-executed activities each month. The regulation also allows banks to set up “expanded-plus” tracks based on a similar template.
The idea is to give a flat, affordable fee up front to banking customers.
Bank supervisor David Zaken found that many similar tracks currently on offer charge more than the average price of the services.
“After we were presented with the pricing of the basic track at various banks, we reached the conclusion that it is not in line with the goal of the process, and we therefore decided to take an exceptional measure and to impose supervision on the basic track and determine its maximum price,” Zaken said.
While only the basic track is to be supervised, Zaken said setting a baseline would help customers decide whether the expanded track is worthwhile at the price offered, which should help to keep prices reasonable.
The regulation is also meant to increase competition.
“The purpose of the tracks program is to improve the ability of the banks’ customers to compare prices, to increase price transparency, and at the end of the day, to encourage competition in the management of current accounts,” the bank said, using the British term for checking accounts.