Bank of Israel presents new bank fee tariffs

Banking fees will be cheaper for customers who use direct-banking services, but more expensive for those who make their transactions via teller-assisted services.

Rony Hizkiyahu 88 224 (photo credit: Ariel Jerozolimski)
Rony Hizkiyahu 88 224
(photo credit: Ariel Jerozolimski)
Banking fees and commissions will be cheaper for customers who use direct-banking services, but more expensive for those who make their transactions via teller-assisted services, the Bank of Israel announced Sunday. The central bank's Supervisor of Banks Rony Hizkiyahu on Sunday presented the much-awaited uniform list of banking fees and commissions as part of the bank fees reform going into effect next month. From July 1, the number of transaction fees charged by the country's financial institutions will be reduced by about two-thirds: from 198 to 72. "This is a revolution. For the first time there is a law for improving the terms of customers opposite the banks," Hizkiyahu said at the presentation of the new uniform and transparent list of bank fees in Jerusalem. "Until now you did not know what you paid for and what you didn't. From now on, a new fee can't just be invented every day. The central bank will supervise banks' fees and has the tools to intervene in cases where the customer is charged high fees." Under the new bank fee reform, 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. For checking accounts, banks will be allowed to differentiate between common services received at a branch and operations received directly (by Internet, telephone or other automated tools - without personal handling from a teller). A list of common, direct-banking operations will be charged a uniform fee of between NIS 1.35 by Bank Hapoalim and NIS 2.9 by Union Bank. Teller-assisted services will be more expensive, ranging from NIS 5.5 per operation charged by Bank Leumi to NIS 7 charged by Bank Mizrahi. The average monthly checking account management fee will fall from NIS 24.50 to NIS 24 as a result of the reform. "To increase transparency, the names and functions of the fees across the banking system will be unified and disclosed publicly so consumers can compare," Hizkiyahu said. "At the same time, switching from one bank to another will be made easier. What we are hoping for is that this situation will create more competition among banks leading to a reduction of fees to retain customers." The catch of the reform lies with customers who are unaware of, uninterested in or have limited access to direct services. Such customers, generally the elderly and the poor, will be affected because they will be charged more. In an attempt to limit this impact, the central bank will include in the the new price list instructions that such a customer who is unable or unwilling to receive direct services will be entitled to four teller actions per month for the same cost as direct services. The bank fee reform seeks to cut 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, small businesses and for foreign exchange accounts. In June 2007, 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 would be charged. 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.