The Banking Supervision Department will require banks to send an alert via SMS to their customers’ mobile phone if five checks from their account were refused due to insufficient cover over the span of 12 months, or if a restriction was placed on their account.
The Banking Supervision Department’s goal is to increase customers’ awareness of the situation in their account, and to help them avoid becoming restricted customers. When an account is restricted, the customer is prohibited from using checks, and the particulars of the restricted account are published on the Internet. In the case of a restriction under aggravated circumstances, the account holder’s name and ID number are also published. Likewise, restriction has an impact for several years on the credit rating assigned by financial institutions, which affects the customer’s ability to receive credit and the terms of credit (including credit facility, loan, mortgage, and credit card).
The step taken by the Banking Supervision Department utilizes the technological means that are in common use by customers to provide faster alert services to customers. A focused message sent in real time will provide bank customers the option of responding immediately, thus avoiding a situation of refusal of additional checks in the account, because the refusal of five additional checks within the 12-month period referred to will lead, by law, to imposing a restriction on the account. Therefore, alerting the customer regarding the refusal of five checks in an account can help in avoiding restriction. If a restriction was already placed on the account, the alert will enable the customer to react quickly.
If the customer agreed to join the service of receiving messages from the banking corporation via means of communication, the message will include detailed information about the fact that checks have been declined in the account. If the customer did not join that service, only a general message will be sent, warning that an activity has occurred in the account which requires clarification with the banking corporation, referring the customer to it. If the corporation cannot send an SMS alert to the customer due to technical issues (for example, the corporation does not know the customer’s mobile phone number or the customer has a device that does not receive SMSs), then the banking corporation will notify the customer regarding the checks’ refusal or the restriction through another means of rapid communication (such as landline telephone) in accordance with its internal communication procedures.
The Banking Supervision Department already assists customers that became restricted at banks. The Banking Supervision Department’s Checks Without Cover Section clarifies enquiries by the public regarding restricted accounts and customers through telephone, fax, and computer, and addresses the business, legal, and technological aspects of such enquiries. The Section is responsible for managing the database of restricted customers and accounts in Israel, through an interface with the banking system and with specialized entities that are authorized to impose a restriction, and is responsible for the implementation of the Checks Without Cover Law. As of the end of January 2016, there were 33,000 customers who were restricted due to unpaid checks.