After three years of preparation, the rapid bank switching reform got underway yesterday. The banks and the Bank of Israel report that the first day of the reform, designed to enable customers to transfer their accounts from bank to bank within seven days, without cost and without the need to go to the bank branch, went by without a hitch.
The Bank of Israel says that it received no complaints about the process from either customers or banks. The Bank of Israel also says that from its own checks it does not appear that the banks were making it difficult for customers to move their accounts away from them. It said that all the banks were committed to the process and were complying with it. For them, it represents an opportunity to acquire new customers. The banks themselves also report that all went smoothly.
Checks by "Globes" found that on the first day of the new procedure only a few dozen customers of each of the banks turned up at branches or sent requests via bank internet sites to transfer their accounts. The banks ascribe the low numbers to the Sukkot holiday, which is usually a quiet period for them.
At present, each bank only knows about the customers who applied to join. Only tomorrow, at the earliest, will each bank receive from the central system information about customers who have requested to leave.
Monitoring customers moving between banks has become possible thanks to a new system developed over three years, with Masav (the central bank clearing system) coordinating the project. The system enables people to transfer most household current accounts, but it does not allow the transfer of corporate accounts or accounts with regard to which there is some legal complication or impediment, such as accounts subject to garnishee orders, trustee accounts, accounts run by guardians, and so forth.
After the customer transfers an account and the account at the old bank is closed, debits and credits applying to the old account are automatically switched to the new one ("follow-me" service). Among the transactions that will transfer automatically are credit and debit balances in shekels and foreign currency, permissions to charge the bank account, standing orders, checks, transferrable securities (both Israeli and foreign), and permissions to charge bank and non-bank credit cards.
Transactions that will not be transferred automatically include loans and credit (including mortgages), deposits and savings programs, non-transferrable securities, and cash and financial products serving as collateral for bank credit. In order to transfer these items, a customer needs to come to an arrangement with the bank.
And what if the customer changes his or her mind? A transfer of accounts between banks can be cancelled up until the Friday after the request to switch to the new bank was submitted. If the transfer has already been executed, and the customer wishes to return to the previous bank or switch to a third bank, he or she must wait at least three months from the date of the previous transfer.
Published by Globes, Israel business news - en.globes.co.il - on September 23, 2021
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