Recognizing the high concentration and price of fees that Israel's largest banks charge their customers in relation to banks in countries around the world, the Knesset Committee on the Inquiry of Bank Fees recommended in its final report released Monday that the list of fees be reduced immediately and that control of fees charged be transferred from the Industry, Trade and Labor Ministry to the Bank of Israel.
According to the committee's report, the transference of control to the central bank will streamline the process of systematically reducing the approximately 400 various fees currently charged, thereby saving bank customers a significant amount of money per year, as well as allowing for greater competition among the country's smaller banks.
In a speech to the inquiry committee last week, Bank of Israel Governor Stanley Fischer blamed the current low level of competition in Israel's banking sector on the fact that a limited number of banks capture the entire market, making it very difficult for smaller banks to expand their customer base and almost impossible for foreign banks to break into the household sector.
The inquiry committee also demanded that the banks publish a complete list of the fees they charge customers as well as creating a uniform table of charges to be adopted by all the banks, including uniform names for all fees, which would provide the necessary transparency to customers.
In addition, the committee recommended that in order to more easily allow customers to switch from one bank to another, a uniform system be instituted whereby the customer wanting to switch banks gives power of attorney to the bank to which he plans to switch to arrange all the necessary transactions.
The committee also recommended to the Bank Supervisor that he publish a quarterly bank fee index measuring the level of fees each bank charges.
In a response sent to MK Moshe Kahlon, the chairman of the inquiry committee, Moshe Pearl, director-general of the Banks Association of Israel said the group did not agree with the recommendations, claiming that the banks are capable of governing themselves and that their fees are within reasonable means.
Pursuant to a request from Pearl, the association was granted an opportunity to dispute the recommendations, at another committee hearing today (Tuesday).