Banks to Tackle Red Tape When Customers Switch Accounts

Banks Supervisor David Zaken proposes move to ease process for people moving from one bank to another, in bid to stimulate competition.

Tomer Appelbaum

Banks will be able to take care of all the bureaucracy involved in transferring an old account from a different bank on behalf of new customers, under a draft order released by Banks Supervisor David Zaken on Thursday.

Zaken’s announcement comes in the wake of statistics indicating that only 4% of customers switch banks every year, a sign that competition is low.

The order states that in the future, customers will be able to close a bank account without having to show up physically at the bank branch. Instead, they’ll have options such as doing so online or by phone.

Customers have reported that banks drag out the process, give them false information and use other tactics to keep them from closing accounts.

Banks will also be required to give customers periodic reports summarizing the status of their accounts, including their assets and loans, the fees they paid and the interest they received. This is supposed to ease the process of comparing terms between banks.

A previous draft order had called for this report to include the customer’s credit rating. Zaken dropped this demand in the face of objections from the big banks, who claimed this was proprietary information, as well as social organizations, who said it would lead to discrimination against poorer customers. The issue is being reexamined.

Meanwhile, Zaken’s plan to force credit card companies to do away with fees for delayed payments is expected to take force soon, after a five-month delay in implementation. The Bank of Israel has not explained the reason behind the delay.