Supervisor of Banks David Zaken today announced that he has decided to halve the minimum fee of checking accounts. The banks' minimum fee is currently defined as two transactions by a bank clerk (NIS 13). Zaken ordered the definition to be changed to one transaction by a bank clerk, and the change will come into effect in January 2014.
The decision will have a major effect on the banks' income from fees. The average bank account fee has fallen in recent years. It was NIS 13.70 in 2012, 12% less than in 2010. The reduction in the minimum will further accelerate the fall.
The Bank of Israel also published today a series of guidelines to improve the transparency of information banks provide customers, in order to improve competition in the banking system.
Expanding disclosure on fees
The Zaken Committee said that the difference between the listed bank fees on the sale and purchase of securities and the actual fees charges was too high. The difference could reach tens of percent. Zaken ordered the banks to rewrite the price lists to better reflect the fees collected. The banks made the change in March, but the changes were mostly cosmetic, amounting to a reduction of 0.05-1%.
The Bank of Israel was presumably displeased by this, and it is now ordering the banks to widen their disclosure of fees. Banks must show customers a table of the average fee charged for each transaction, based on a breakdown of the transaction's size. This will give customers an indication whether the fee charged is higher or lower than the average.
This order will also come into effect in January 2014. It cannot be ruled out that had the banks better detailed the price list in advance, this new measure could have been avoided.
The Bank of Israel also announced the mix of current account plans that the banks will have to present. The Bank of Israel recently said that, by the end of 2013, the banks must establish two current account plans: a basic plan and an expanded plan. The Bank of Israel will establish the mix of plans, while the banks will set the fees. The mix indicates that, in most cases, the banks will lose fees income as customers switch from the current method (a separate fee for each transaction) to payment under the plans.
The Bank of Israel today announced the mix of plans. The basic plan will include one transaction by a bank clerk, and up to ten direct transactions (telephone, Internet, ATM, etc.) by the customer. "This action reflects the average activity of customers," says the Bank of Israel
Until now, the average bank fee for this mix of transactions was NIS 20. Zaken expects the banks to charge less than the average fee under this plan, i.e. less than NIS 12.
The expanded plan will include ten transactions by a bank clerk and up to 50 direct transactions. Customers currently pay more than NIS 100 in fees for this mix of transactions, but under the new plan, the banks will have to present a substantially lower price.
Published by Globes [online], Israel business news - www.globes-online.com - on July 8, 2013
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