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The retail banks are violating the Investment Consultancy Law, according to a survey of six banks conducted last week by Ha'aretz. Some of the banks' investment advisers are not licensed consultants, a violation of the law.

In five of the six banks checked by Ha'aretz, investment advice was given without the client signing a consultancy agreement form as stipulated by the law. In other cases, investment advisers recommended investments in mutual funds managed by that particular bank, without presenting alternative funds.

The survey was conducted among Israel Discount Bank, the First International Bank of Israel, United Mizrahi Bank, Bank Leumi and Mercantile Discount Bank in a similar fashion to the checks conducted by the Supervisor of Banks. Only in one bank, Hapoalim, were no violations found.

The Investment Consultancy Law, passed in 1995, stipulates that only licensed investment consultants who have passed Security Authority examinations are entitled to offer investment consultancy. The law further stipulates that the client must sign an agreement before receiving investment advice and that the investment adviser will not give preference to securities or financial assets of the bank where he or she is employed or of any other institution connected to that bank.

In some of the banks checked, the investment advisers said that they could not give advice without first signing a consultancy agreement, but despite this, they gave advice when asked to.