Several Knesset Finance Committee members were up in arms over the swift procedure in which the committee's chairman, Yaakov Litzman, pushed through the vote on distribution commission fees that banks may charge on provident and mutual funds.
Litzman is accused of allegedly rescheduling the vote as the first item of the agenda on Monday, taking advantage of the late arrival of the majority of the committee members.
Finance Committee members Ronny Brison and Ehud Rassabi of Shinui accused Litzman of cynically abusing his power in an effort to pass the original proposal by the Ministry of Finance on commission distribution fees.
"The banks will benefit at the expense of the general public," said Brison and Rassabi in a joint statement. "Litzman has humiliated us as elected legislators. The only possible explanation for his behavior is an agreement with the Finance Ministry at the expense of the general public."
Other finance committee members threatened to complain to the High Court of Justice arguing that Litzman pushed through the vote within the first minutes of starting the meeting, and without enabling any further debate on the issue.
The committee approved mutual and provident fund commission payments in accordance with the original Ministry of Finance regulations, setting a uniform fee that all banks will charge mutual funds - as the small- and medium-sized banks have demanded.
The proposal on commission payments stipulated a 0.25 percent payment on shekel mutual funds, 0.4% on bond-based mutual funds, and 0.8% on stock-based mutual funds. Old provident funds will charge a 0.1% commission payment while new provident funds will charge 0.25%. On average, the fee levels are 30% of the market's management fee.
Brokers wanted the fees to be 15%, while the large banks lobbied for the distribution fees to be 62% of management fees. The new banking fees regulations will come into effect in April.
The finance division of the Federation of the Israeli Chambers of Commerce welcomed the completion but private brokers complained that distribution fees for mutual funds were set too high.
Lower uniform fees for mutual funds, around 0.2% were foreseen but on pressure of the banks a differentiated higher fee was set, the Federation said.
Under the Bachar reform of the banking system and the capital market, the banks have to sell their holdings in provident and mutual funds. Banks demanded the right to charge distribution fees for selling units in mutual funds. Originally treasury director-general Joseph Bachar had not intended for the banks to get any distribution fees at all, but they agreed to a compromise that the banks hoped to sweeten at the Knesset level.
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