MK Rachel Azaria, chair of the Knesset Reforms Committee (officially known as the Special Committee on the Planning and Building Bill and the Maternity Leave and Parenting Bill) did not like the draft circular released by the Bank of Israel on regulating the relationship between the banks and the digital peer-to-peer (P2P) lending platforms on Sunday. "The draft published yesterday was not what we had in mind, and the draft guidelines unfortunately do not provide a response on the maters we discussed," Azaria said yesterday in a session she convened on the complaints of the platforms against their treatment by the banks.
Azaria is now threatening to promote legislation that will regulate relations between the banks and the platforms, but this appears to be designed to pressure the Bank of Israel to publish new, more focused guidelines . "I am asking the Capital Markets Authority to start a process of legislation. If we reach agreement with the Bank of Israel, we shall withdraw the legislation, and if not, we shall have to take care of the matter in a law."
Another session on the matter is due to be held in a month's time, after which Azaria will decide whether to proceed with Bank of Israel rules or with legislation. It emerged from yesterday's session that the instructions that the Bank of Israel published that, among other things, forbid the banks to refuse to open accounts for the platforms, were not to the liking of the Capital Markets Authority either, and the Authority representative who took part in the committee session said the draft had been published without consultation it.
The Reforms Committee session was held following complaints from the P2P platforms about the difficulties that the banks were placing in the way of their day-to-day operations. "In the least severe cases, the bank clerk tells the customer that it's not worthwhile to deposit money with the platforms, and in the worst case, the clerk actually prevents it. When a customer obtains a loan from one of the platforms, the bank makes things difficult for him with questions about the source of the money. It's happening in almost all the banks in different branches," BTB Israel CEO Shlomi Turgeman told the committee.
Meitav Dash Loans CEO Ofer Carmel said, "We expect the regulator to be more active and to take the initiative more, so that the change that the public is crying out for will come."
The representative of the Association of Banks in Israel rejected the claims, saying, "I'm sorry to spoil the populistic party, but the platforms do not bother the banks. The banks have much bigger and more significant competitors, and they work with them too. The problem of the banks is with money laundering. The solution has to be an order exempting the banks from responsibility for money laundering via the platforms."
The representative of the Israel Money Laundering and Terror Financing Prohibition Authority said however that it was not creating difficulties for the banks. "We are not responsible for the money laundering argument that the banks are employing - we have no interface with the banks. We are currently working on a money laundering prohibition order that will apply to the P2P players, and I believe that it will be ready shortly," she said.
Sima Spitzer. head of the Licensing and New Banks unit at the Bank of Israel, expressed annoyance at this statement and called for it to be withdrawn. "There is no symmetry here," she said, "The banks are subject to a draconian money laundering prohibition, while there is still no order applying to the P2P companies. The result is that the banks have to open an account and take the platforms' risk upon themselves. How can the Authority say that it doesn't understand what the banks are talking about?"
Published by Globes [online], Israel business news - www.globes-online.com - on December 12, 2017
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