The Supervisor of Banks said, “In 2016, the Banking Supervision Department took additional measures to reduce fees for households, which are expected to contribute to lower fees in 2017 as well. In addition, our call to the banks to review their fee schedules and to examine other reductions of fees for actions with low costs has led the banks to lower or cancel fees, such as the cancellation at most banks of the fee for handling estates and inheritances; exempting pensioners from the former Soviet Union from paying fees at most banks; granting benefits or exemptions at most banks from current account fees for Holocaust survivors; and other reductions as detailed in the report. The Banking Supervision Department will continue to monitor the banks’ fee schedules, and will continue to act toward reducing any excessive fees that there may be.
Alongside the initiatives taken by the Banking Supervision department to reduce fees, I call on households to be active in their interface with the banks, thereby further reducing the fees that they pay. About 2 million households and small businesses can save if they move to the basic or expanded fee tracks (ask about them at your bank), and all customers can save money on fees if they do more of their banking through customer-executed transactions, such as using an ATM machine, via the Internet or a cellular application, instead of through teller-executed transactions. It is less expensive, simpler, and more convenient, once you get used to it.”
The highlights of the report:
· An over-all analysis of banks’ revenue from fees shows that in recent years, there has been a continued decline in fees as a share of total assets. This decline is derived from fee reductions required by the Banking Supervision Department—mainly fees to households; stability in the other fees, and a continued increase in banking activity and assets. The monthly cost for holding and using a credit card was NIS 10.5, on average.
· In the first half of 2016, the decline in the monthly cost of managing a current account continued, and the monthly cost of using a credit card remained stable. Over the past five-and-a-half years, there has been a decline of about 15.6 percent in the cost of managing an account.
· As a result of the Banking Supervision Department’s call at the beginning of 2016 to review and find excessive fees, a variety of fees were reduced. For instance: Bank Hapoalim, Leumi and Discount cancelled the fee for handling estates and inheritances[1]; Discount Bank, Mizrahi-Tefahot and First International exempted those receiving pensions from the former Soviet Union from paying fees[2]; Discount, Leumi and Mizrahi-Tefahot granted benefits or exemptions from current account fees to Holocaust survivors; Leumi exempted customers from fees for generating standard statements (other than housing loans); First International eased fees for services to small businesses; and Hapoalim set levels for the foreign exchange transfer fee (transfers up to $200). The Bank of Jerusalem has a full exemption from current account fees for customers, and there are banks that exempt certain population groups from fees, such as students, soldiers, and so forth.
· During 2016, about 200,000 senior citizen customers and those with disabilities were transferred to the basic fee track at the request of the Banking Supervision Department. The process was carried out following an examination by the banks regarding the worthwhileness for each individual customer.
· About 2 million customers can save on fees through the simple step of moving to a fee track created by the Banking Supervision Department, and joining the half-million customers that have already moved and saved. The Banking Supervision Department calls on household and small business customers to examine with their bank the feasibility of moving to a fee track.
· Following measures initiated by the Banking Supervision Department in 2016, a number of guidelines are expected to come into force in 2017 that will lead to a further reduction in fees, increased transparency, and an improvement of the banking customer’s situation. Within this, all fees for customer-executed transactions will be reduced relative to the fees for teller-executed transactions. The Banking Supervision Department’s objective in this requirement is to ensure that the savings from streamlining at the banks will be passed on to the consumers. In parallel, the Banking Supervision Department regulated the fees for withdrawing cash from ATMs, in view of the process of branch closures. Alongside these, the Banking Supervision Department approved differential fees for a bank customer carrying out a teller-executed transaction (voucher payments or obtaining change) and for someone who is not a customer managing an account at that bank.
· The report also presents the number of ATMs in the banking system. The picture that emerges is that there is a rapid upward trend in the number of ATMs despite the process of closing branches. Between 2013 and June 30, 2016 (a period of three-and-a-half years), there was an increase of about 43 percent in the number of ATMs. In the first six months of 2016, there was an increase of 5.7 percent compared with 2015. These machines have become more sophisticated, and enable customers to conduct a large part of their basic account management activity through the machines. In addition to cash withdrawals (including foreign currency), customers can deposit cash, deposit checks, obtain a loan, open a deposit, and more. In addition to the bank ATMs, there are also nonbank ATMs, which are not supervised by the Banking Supervision Department, where fees are significantly higher than those of the banks’ machines.
· Pension advising for bank customers – With the aim of encouraging the banks to operate in the area of pension advising, which is an area of tremendous importance for customers, a change was made in 2016, in conjunction with the Capital Market, Insurance and Savings Division of the Ministry of Finance, as part of which the Banking Supervision Department approved the addition of a pension advising service to the fee schedule. The Banking Supervision Department expects this step, alongside others made by the Capital Market Division during the year (such as the publication of draft regulations to enable the banks to market Managers Insurance policies), will lead to the increased presence of the banks in the area of pension advising to customers, and thereby increase competition in the field. It is emphasized that alongside the fact that the service is essential and of value to the customer, it is a voluntary service, and the customer can always obtain the service outside the banking system, or not obtain it at all.
· The Bank of Israel calls on the public to make informed consumer decisions on banking products and services, and provides information and tools to customers on its website, including advice for saving costs.
[1] First International, Otsar Hahayal and Masad announced at the beginning of 2017 that they are cancelling the fee for handling estates and inheritances.
[2] At Hapoalim and Leumi the exemption has been in place for some time.