Lawsuit takes aim at Hapoalim's hidden fees

An application for a class action against Bank Hapoalim in the amount of NIS 500 million was filed this week at the Tel Aviv District Court.

By HADAR KANEH, THE BUSINESS POST
January 31, 2007 07:12
1 minute read.
bank poalim 88 298

bank poalim 88 298. (photo credit: Ariel Jerozolimski)

 
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An application for a class action against Bank Hapoalim in the amount of NIS 500 million was filed this week at the Tel Aviv District Court. Ella Politis, a customer of one of the bank's Jerusalem branches, brought the suit through her attorneys, Noam Shechner and Yitzhak Aviram. According to the claim, for a number of years Bank Hapoalim has been gouging its customers, who purchase structured products from it. The bank sells the structured products while collecting a hidden commission, failing to disclose the bank's financial margin on the transaction, and failing to disclose preferable alternatives to the customer - all contrary to explicit legal provisions, the suit claims. "No customer would ever knowingly agree to pay a NIS 700 commission for investing NIS 20,000. No customer would ever knowingly agree to pay a 3.5% commission on the investment. No customer would ever knowingly agree to pay a 90% commission on an option he purchases, and therefore Bank Hapoalim makes sure that its customers pay all these unknowingly," the claim states. The attorneys believe that this action will put an end to the unilateral gouging that is found in the structured products' pricing and to the improper practice, they argue, employed by Bank Hapoalim. The claim asks the court to order the return of the funds illegally taken from customers. The attorneys are also seeking to have the supervisor of banks, the Israel Securities Authority and the attorney general join as parties to the proceeding and to take all necessary action to stop the marketing and sales of the bank's structured products. Moreover, the claim demands that the attorney general or the Securities Authority consider opening a criminal investigation into the matter. "Central banks in other places around the world have done so, and the time has come for the authorities in Israel, as well, to intervene on behalf of the customers." According to the attorneys, the total damage that the bank has caused to tens of thousands of its customers since 2000 is estimated at half a billion shekels. Bank Hapoalim on Monday said it had not had sufficient time to study the claim.

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