Imagine that the year 2007 has arrived. Suddenly concerned about your future, you mosey into your bank branch, hoping for advice on pension savings.
You expect the bank clerk to deliver a learned discourse on the pros and cons of life insurance programs, provident funds and pension funds, the three instruments among which you have to choose when saving for old age.
You are in for a disappointment.
First of all, the adviser will explain that he can't discuss life insurance, because the banks aren't allowed to market any before 2010. Even after that they can't collect commissions for selling life insurance policies, so in no case will it pay for the bank to urge you to go that route.
Second, said clerk will explain that he can't advise you on provident funds either.
True, provident funds can be an excellent way to save for your dotage, but it doesn't insure you against premature death as life insurance policies do, or against disability that prevents you from working. For a provident fund to be a perfect vehicle for your future, you need supplementary coverage. But the banks can't sell you insurance, nor does it pay for them to do so. So they won't be urging you toward provident funds either.
"Now," chirps Clerk, "let me recommend that you buy into a pension fund."
And all this resounds to the greater glory of our Knesset, that parliament of our elected representatives, that bowed before the greatness of the bankers' lobby (when enacting the legislation regarding the capital market reform), and created the tortured result that banks are supposed to advise their customers on pension affairs, as long as they only provide advice on one of the three possible avenues.
The Knesset de facto banned the banks from advising on insurance, to leave that area free of competition in favor of insurance agents. It sacrificed the public's interest (objective advice) on the altar of the insurance agents' interests.
This is the reeking dish they have served up. Now all that remains is for the people of Israel to swallow it.
Can the stew be saved? Yes: one can amend the law that banned the banks from advising, or taking commissions from advising on insurance. The amendment should not only be done, it should be done post-haste, before the banks start providing necessarily lopsided advice on pensions.
The commissioner of insurance and capital markets, Yadin Antebi, who last week decided to postpone allowing the big banks to provide pension advice to salaried workers, had not overlooked the problem. Antebi indeed hopes to correct the evil before the banks start dispensing advice on pensions.
And if our elected representatives in Knesset really do care about the public interest, they will help him to do it.
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