Knesset c'tee demands banks cut fees, allow competition

Banks reject the need for legislation, claiming that they are capable of governing themselves.

jp.services1 (photo credit: )
(photo credit: )
The parliamentary inquiry committee into bank fees is recommending a drastic reduction in the number of charges the institutions command to 75 from 350, while also establishing a uniform list of fees, a quarterly bank fee index, as well as introducing measures to ease the switch from one bank to another in an effort to boost competition in the concentrated sector. The bank fee committee, chaired by MK Moshe Kahlon and under the jurisdiction of the Knesset Economic Action Committee, which was formed more than three months ago to investigate the banks' fee structure, on Sunday will publish the final report of its recommendations. The draft report by the committee found that the concentration in the Israeli banking system was greater than in most Western economies. More specifically, it said, bank fees here were 70 percent higher than the fees collected by Western banks. At the same time, bank fees on households on a per capita basis were the highest if compared to Western countries. Furthermore, the draft report criticized that the transparency necessary for bank customers to compare charges was inadequate. Therefore, the report recommended cutting the number of bank fees to 75 from the current 350, while also creating a uniform table of bank fees to be adopted by all banks, including uniform names for all fees for simpler identification and comparison. In an effort to increase competition, the report also sees the necessity of creating a bank fee index, which would measure the level of fees of each bank to be published on a quarterly basis. In order to ease the switch from one bank to another and boost competition between the banks, the draft report recommended introducing a uniform system in the sector, whereby the bank to be switched to would be given power of attorney to arrange all the necessary transactions, by the customer wishing to switch banks. The committee has held numerous hearings on the subject over the last few months. Earlier this week, Bank of Israel Governor Stanley Fischer urged the panel to move ahead on legislating fees, while stressing that regulation only should be conducted by "appropriate" committees. The country's banks, however, rejected the need for legislation, claiming that they are capable of governing themselves, and have claimed repeatedly that their fees are not excessive. Last month, the Knesset passed the preliminary reading of a private bank fee regulation bill proposed by Kahlon and fellow MKs Amnon Cohen and Gilad Erdan.