Summary of Banking Supervision Activity on Bank-Customer Relations in 2006 in Regard to Enquiries of the Public and Applying the Lessons Drawn from them

31.1.2007

Summary of Banking Supervision Activity on Bank–Customer Relations in 2006 in Regard to Enquiries of the Public and Applying the Lessons Drawn from them

	In 2006, the Banking Supervision Department handled 4,176 complaints and 3,092 requests for information and miscellaneous enquiries, to which it responded in writing.
	25.1% of complaints on which a stance was taken in 2006 were found justified or partly justified (as against 26.8% in 2005, 26.4% in 2004, 29% in 2003, and 32% in 2002). The percent of justified complaints has been falling in recent years, mainly due to the Banking Supervision Department’s comprehensive treatment of bank–customer relations, which projects onto the entire banking system in respect of how the system works with its customers.
	The main topics of the complaints were housing loans, bank-account management, checks, bank charges, and credit.
	The total compensation that banks paid customers on account of specific complaints that were handled was approx. NIS 2.3 million.
	The information that reached the Banking Supervision Department in the course of its handling of enquiries from the public, as well as information from other sources, established a basis for system-level treatment of many issues in 2006, including matters related to early payback of loans, calculation of interest, and application of bank charges. Due to the treatment of these matters, the banks were required, among other things, to make NIS 13 million in reimbursements to customers—largely by Bank Hapoalim on account of upward rounding of the LIBOR rate to the nearest one-eighth percentage point without due disclosure to customers.
During 2006, the Banking Supervision Department dealt with 4,176 complaints and 3,092 requests for information and miscellaneous enquiries, many of which originated in lack of knowledge of banking procedures and directives.
Of the complaints on which the Department took a stance in 2006, 25.1% were found to be justified or partly justified. Among the five large banks, Mizrahi-Tefahot Bank had the highest share of complaints that were found to be justified in 2006 (31.1% vs. 27.9% in 2005), followed by Israel Discount Bank (31% vs. 29% in 2005), Bank Hapoalim (27.4% vs. 30.3% in 2005), and First International Bank (23.1% vs. 25.4% in 2005). Bank Leumi had the smallest proportion of justified complaints, at 16.5% (as against 16.1% in 2005).
Among the credit-card companies, ICC had the largest proportion of justified complaints in 2006 (19.4% vs. 14.3% in 2005), followed by Isracard (12.3% vs. 17.6% in 2005). No justified complaints were found against Leumi Card (as against 6.9% in 2005).
The main issues of concern in the enquiries, as reflected in the summary, were housing loans, bank-account management, checks, bank charges, and credit.
As a result of the Banking Supervision Department’s treatment of the public’s complaints, the banks were asked, among other things, to make reimbursements to their customers. The total compensation that the banks paid out on account of specific complaints that were handled was approx. NIS 2.3 million.
The information that reached the Banking Supervision Department in the course of its handling of enquiries from the public, as well as information from other sources, established a basis for system-level treatment of many issues in 2006, including matters related to early payback of loans, calculation of interest, and application of bank charges. Due to the treatment of these matters, the banks were required, among other things, to make NIS 13 million in reimbursements to customers—largely by Bank Hapoalim on account of upward rounding of the LIBOR rate to the nearest one-eighth percentage point without due disclosure to customers. In all, 34,001 customers received reimbursement due to the Department’s handling of these matters.
The handling of public enquiries is part of the Banking Supervision Department’s comprehensive activity for the protection of customers’ rights. Additional activities by the Department for this purpose include suing in Standard Contracts Court to strike down or modify terms disadvantageous to customers in the banking system’s standard contracts, monitoring of bank charges, and the issue of directives to banks on how to act appropriately toward customers, to name only a few.
Bank customers are welcome to contact the Public Enquiries Unit of the Banking Supervision Department in any matter related to bank–customer relations (Tel. [phone], fax [phone], POB 780, 91007 Jerusalem, or at [e-mail]). The Banking Supervision Department notes again that information on bank-customer relations is available at the Consumer Department of the Bank of Israel web site, which contains copious information that the public may find useful in its dealings with the banks. The URL is http://bankaut.bankisrael.gov.il

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