Looming elections may have an unexpected affect: relaxing the new regulations governing overdrafts.
Under the new regulations, effective from January 1, anyone whose overdraft exceeds the credit framework set by the bank will be subject to stiff penalties and bounced checks.
The country's big banks have been pressuring Knesset members for some flexibility in the enforcement of the new regulations. For their part, MKs whose parties want to be seen as sympathetic to financially strapped potential voters have their own interest in getting some wiggle room, at least until the elections on March 28.
In response to these pressures, Supervisor of Banks Yoav Lehman yesterday told the Knesset Economics Committee that he was willing to accept an adjustment period, during which the new overdraft rules would not be fully enforced, in order to head off a possible flood of bounced checks and rejected standing orders come January.
"Every request from a business entity, including the banks, will be evaluated carefully in order to carry out the measure - the effects of which will be felt in the pocket of every Israeli consumer - in the best way possible," said a statement released yesterday by the Prime Minister's Bureau.
Bank Leumi Vice President Yona Fogel also weighed in on the overdraft issue. "We expressed our opinion that customers will need time to get used to the new requirements, and it will be easier if a transition period is granted for implementing the directive that will make it easier for customers."
A Bank Hapoalim spokesman expressed similar sentiments. "Bank Hapoalim supports the guidelines, but not the hurried timetable set by the supervisor, since this could cause harm to customers. The bank has appealed to the banks supervisor on this matter."
We're not ready yet
The chair of the Knesset Finance Committee, MK Yaakov Litzman (Agudat Yisrael) yesterday halted a vote on how much the banks will be permitted to charge in distribution fees for transactions related to provident and mutual funds.
Litzman's move followed a tense and noisy session in which MKs verbally attacked treasury representatives. Deliberations are expected to continue next week.
At the start of the session, Litzman declared the meeting closed to journalists.
The treasury fears that if the fee issue is not decided before the general election in March, it could affect the agreements between the banks and those who are purchasing mutual funds from them. Every increase in the fees the banks can charge for distributing units in provident and mutual funds will lower the final price received by the banks when they sell the funds.
Under the Bachar reforms, the banks are being forced to relinquish their holdings in provident and mutual fund management companies. The fees, a controversial issue in and of themselves, are a degree of compensation for the loss of the management companies.
The chairman of the Securities Authority, Moshe Terry, said that all the agreements with fund purchasers were carried out in accordance with Finance Ministry proposals, which recommended distribution fees amounting to 30 percent of the average account management fee.
However, most MKs are pressuring to raise that amount to 45 percent. Treasury director general Joseph Bachar set off yesterday's ruckus by opposing the MKs on the issue.
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