But unlike the others, the rate of the main fee (except for a set payment of just tens of shekels) is not published by the bank so that the customer has no way of assessing the scale of the fee that will be expected from him. On the basis of this fee, the capitalization is calculated (differences in interest), but for the most part and except for loans for housing purposes up to NIS 750,000, the method of calculation used by the bank is like a "mystery" for the customer asking to redeem a loan through early repayment and which is not in accordance with the repayment dates on the loan agreement that was signed. According to the instructions of the Supervisor of Banks the customer must be charged for this fee according to reasonable rules that will express the damage caused to the banking corporation as a result of the early repayment of the loan. The Bank of Israel even outlined a formula for the calculation but this is not enough to uncover the way in which the banks make the calculation. The rules of the calculation and the variables in them require the bank to set the formula, which is fixed by it in an internal mechanism that is not visible, changes dramatically, is not detailed by the bank, and is not passed onto the customer as part of a full disclosure procedure. The customer receives no explanation in how to check the aforementioned calculation.
On the table of fee tariffs published by the banks, they currently publish regarding this fee a negligible amount (of just tens of shekels) for a request for early repayment and regarding the capitalization component of the fee, the table mentions that there are additional financial costs for the repayment of the loan. On the loan agreement that the customer signs, the bank points out in the standard clause that it is entitled to charge this fee for early repayment of the loan due to the damage that will be caused to it as a result of the repayment of the loan. It does not point out on what the charge is based and how the calculation of the damage is carried out. This is the sum total of the disclosure efforts provided by the bank to the customer regarding the within the context of the costs involved in carrying out early repayment of the loan. Let there be no doubt, that this cost can amount to millions of shekels and even more.
The method of calculating the early repayment fee is shrouded in mystery and "endowed" with uncertainty for the banks' customers. In practice, the bank charges its customers for the fee without any explanation and/or previous disclosure about the way in which it is calculated. This contradicts the instructions of the Supervisor of Banks and contradicts the discretionary trust and transparency required by the banks towards their customers. In the case of Neve Gil Hazahav Ltd. versus United Mizrahi Bank, the court instructed the return of the excess amount collected by the bank for early repayment fee charges. As part of the ruling, Judge Reich set that banks should act according to the instructions in regulation 454 according to which the early repayment fee is charged to express the damage caused the bank as a result of the early repayment. At the same time, the level of the fee should be within reasonable bounds that reflect the damage caused the bank as a result of the early repayment and which should be set ahead of time by it for these instances. The ruling set that "The instructions of the regulation do not create a charge or new restrictions in the relations between the bank and customer, but the instruction indicates rules regarding the reasonableness of the requirement in any case where the calculation carried out by the bank is examined according to the reasonable expectations of both sides in the contract."
This was also the case in Moshe Herbet versus Israel Discount Bank. In this instance Judge Raviv ruled that in a case where the loan repayment is the result of a procedure forced by the bank (which put the loan up for immediate repayment), in contrast to the opposite situation in which the customer asks to redeem the loan in an early repayment, then there is no basis at all for charging an early repayment fee.
The conduct of the bank in the context of this collection fee justifies legal intervention that is expected to prevent the customer from being overcharged by large amounts that can even reach millions of shekels. The negotiation process with the banks with a suitable demand to reduce the collection fee is expected to yield significant results for the benefit of the customer.
Recently, for example, negotiation talks with a bank for the reduction in the level of a fee where the customer was represented brought about the significant lowering in the size of the fee demanded by the bank; from a demand for a fee totaling NIS 3 million that the bank had demanded from a customer who had asked to repay a loan of NIS 15 million, the bank agreed to reduce the demand to a sum of NIS 1.6 million. This reduction in itself sets up a strong case to show that the banks are implementing excessive charges that sometimes do not reflect any damage, and it is appropriate that there should be legal intervention and examination.