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(photo credit: Ariel Jerozolimski)
The much anticipated decline in bank charges is set to take place by June next year, reducing the number of transaction fees charged by the country's financial institutions by about two-thirds from 198 to 68.
"The Supervisor of Banks believes that the new uniform and transparent list of fees that banks can charge will work towards significantly reducing the cost of banking services," according to the Bank of Israel.
It's also expected to boost competition in the banking sector.
As part of the bank fee reform, Banking Supervisor Roni Hizkiyahu on Wednesday circulated a new draft list of fees, cutting the costs for some transactions while eliminating or consolidating others. Among those to be eliminated are fees for setting up a line of credit, mutual fund investments, evaluation fees of assets, interest rate and dividend payment fees, double-listing fees for business accounts and small businesses and for foreign exchange accounts.
The number of fees for customers' current accounts will be consolidated from the 15 different types currently charged to two types, one for direct transactions either through the Internet, telephone or automated tellers and one for transactions operated through a bank clerk.
"As such, customers will be able to make the comparison of which of the banks is cheaper in the operation of current accounts according to only two types of fees," said Hizkiyahu.
In response to the implementation steps of the bank fee reform, the Association of Banks said that as it has been in the past it remains in favor of transparency in the cost of banking services.
"These or other changes by the regulator will not change the reality which was in place until now - 90 percent of households are paying only 10 bank fees."
The bank fee draft will be presented at the Bank of Israel advisory committee on November 21 and then be sent to the Ministry of Justice by the end of December. In the next step of the reform, the banks will have six months from January to June to consolidate fees and set new tariffs.
"We believe that the Bank of Israel's draft and the changes to how the banks collect fees will hurt customers and competition between banks," said Bank Hapoalim in response to the central bank's announcement.
Back in June, the Knesset Bank Fees Inquiry Committee unanimously approved the Bank Fees Supervision Law, giving the Bank of Israel authority over fees and drastically reducing the number of fees customers will be charged, while imposing harsh penalties on institutions that don't adhere to the new rules.
The law stipulates that banks may not collect two fees for the same service; they must publish a list of fees on a quarterly basis; and they are no longer allowed to charge customers for switching from one institution to another.
Banks also will be prohibited from instituting new fees without prior permission from the Supervisor of Banks.
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