Bank tariff bill passes first draft

New law would limit fees for basic transactions to NIS 1.5.

bank leumi 224.88 (photo credit: Ariel Jerozolimski [file])
bank leumi 224.88
(photo credit: Ariel Jerozolimski [file])
The Knesset plenum on Wednesday passed the preliminary reading of a draft bill that would limit bank fees for teller services and basic transactions to NIS 1.5, rebuffing the free-market approach introduced by the Bank of Israel at the beginning of the month. "The reform has done two important things: reducing the number of total fees and boosting transparency," said Shas MK Amnon Cohen, the initiator of the bill. "However, the reform has clearly not taken into account the weak and elderly groups of the population who have no access to Internet services and are therefore forced to come to the bank and use teller services," he said. "These parts of the population, who previously paid a monthly fee of NIS 10 for a number of transactions, are being hurt badly by the new reform, which forces them to pay an average of NIS 7 for a single teller service." The draft bill stipulates that bank fees for teller services as well as basic bank services such as cash withdrawal, cheque submission and money transfer must not exceed NIS 1.5 each. In addition, the proposal calls upon banks to offer fixed monthly fee packages of NIS 18 for regular customers and NIS 10 for the elderly. Following initial opposition to the draft bill, it was passed with 40 members of Knesset voting in favor and one against, after Cohen agreed to accede to the Bank of Israel's request to wait three months before pushing the bill through a second and third reading. Despite calls by Knesset members, consumer organizations and the public, the Bank of Israel continues to vehemently oppose proposals for bank fee supervision. Speaking at the Knesset Economics Committee on Tuesday, Bank of Israel Governor Stanley Fischer gave his full support to the bank fee reform, emphasizing that it needed to be given a chance to succeed in aiding competition in the banking sector. Fischer and Supervisor of Banks Rony Hizkiyahu asked the committee and the public to show patience and wait for at least three months to test the success of the reform. "When comparing the prices of fees before and after the reform," Hizkiyahu said, "there might be differences, but when examining the management fees of their checking account over the course of a year, customers will see that they are paying less. If that's not the case we have not done our work." The bank-fee reform, which came into effect on July 1, reduced the number of fees from 198 to 72, and certain fees, such as for credit frameworks, were abolished altogether, but most fees on checking account transactions were raised. Under the new bank tariffs, fees and commissions for checking accounts are cheaper for customers who use direct-banking services - ranging from NIS 1.35 per operation to NIS 2.9, but more expensive for those who make their transactions via teller-assisted services mainly used by the elderly and the poorer sections of the population. Teller-assisted services are charged a fee of NIS 5.50-NIS 7 per operation.