Knesset members cheer bank fee reform - but fear it will hurt poor

Israel's Supervisor of Banks Rony Hizkiyahu presented the new uniform list of banking fees and commissions as part of the bank fees reform going into effect next month.

By SHARON WROBEL
June 17, 2008 09:06
2 minute read.
Knesset members cheer bank fee reform - but fear it will hurt poor

Rony Hizkiyahu 88 224. (photo credit: Ariel Jerozolimski)

Knesset members on Monday raised opposition to proposed reforms in banking fees, calling upon the Bank of Israel's Supervisor of Banks Rony Hizkiyahu to endorse changes to the new fee schedule to lessen its impact on Israel's poorest sectors. On Sunday, Hizkiyahu presented the new uniform list of banking fees and commissions as part of the bank fees reform going into effect next month to boost competition across the banking sector and increase transparency. For checking accounts, the banks will be allowed to differentiate between common services received at a branch and operations received directly by Internet, telephone or other automated services. The fees for direct banking operations will range from a minimum of NIS 1.35 (up from the current NIS 1.21) by Bank Hapoalim and maximum of NIS 2.9 by Union Bank. Teller-assisted services will be more expensive - from a minimum of NIS 5.5 per operation charged by Bank Leumi to a maximum of NIS 7 charged by Bank Mizrahi. "We welcome the step taken to boost competition across the banking sector and increase transparency regarding bank fees paid by the consumer," said Welfare and Social Services Minister Isaac Herzog in a letter to Bank of Israel Gov. Stanley Fischer. "At the same time, though, the reform is expected to hurt low-income groups of the population - in particular, pensioners and the weak who do not use 'direct banking' services offered via the Internet and automated banking services. These groups are used to banking operations and transactions opposite a teller." Herzog urged Fischer to reopen discussion on the implementation of the reform in a way which will provide an answer to the needs of all groups of the population and not hurt those who are in need of assistance. Meanwhile, Gilad Erdan, chairman of the Knesset Economics Committee, on Monday scheduled an urgent meeting of the committee for Tuesday with Hizkiyahu's participation to discuss the new bank fee tariffs. At the committee meeting, Erdan is expected to demand an explanation from Hizkiyahu why the banks were allowed to significantly raise most of the bank fees customers are paying for day-to-day operations of their basic accounts. In addition, Erdan will urge the supervisor of banks to force the banks to offer discounts to the parts of the population who will be most affected by the increase in bank fees such as the elderly, students and others. "The Bank of Israel has made use of the authority it was given by the new bank fee law to increase transparency, but has failed to use its authority to intervene in the prices of basic fees," said Erdan. "Fees charged by the banks for teller-assisted services need to be lowered to narrow the tremendous gap between teller services and direct banking services."


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