Ahead of the April 1 introduction of a 3-tier system of banking services fees, the Bank of Israel announced Wednesday it will supervise the price of the cheapest tier and set its maximum price at 10 shekels ($2.90) a month.
An amendment to the banking regulations that comes into effect next month requires banks to offer customers uniform, predetermined “basic” and “expanded” tracks of management fees for checking accounts. The type and maximum number of transactions per month in each track, which were determined by the central bank, are spelled out.
In a press release, the central bank said it made the decision to supervise the basic fee bundle “in view of the fact that the price set by most of the banks for the basic track, and presented to the Banking Supervision Department, is higher than the average price actually charged for the basic current account management services,” thereby defeating the purpose of the amendment.
The goal of the amendment was to increase competition among the banks and make it easier for customers to compare the services offered by each.
“After we were presented with the pricing of the basic track at various banks, we reached the conclusion that it is not in line with the goal of the process, and we therefore decided to take an exceptional measure and to impose supervision on the basic track and determine its maximum price,” Banks Supervisor David Zaken said.
Average monthly transaction fees for checking accounts are currently around 13.50 shekels, according to the Bank of Israel’s biannual report on bank fees.
From April 1, customers can choose to remain with the current pay-as-you-go method or select one of the new tracks. All banks must offer the basic and the expanded track, and can choose to offer a premium, “expanded-plus” track as well.
The basic track includes up to one teller transaction and 10 customer transactions a month. The expanded track includes up to 10 teller transactions and 50 customer transactions. The expanded-plus track, as its name implies, includes the same type and number of transactions as the expanded track, plus whatever additional services the bank chooses to included.
“In regard to the expanded track, we call on the public to make use of the fact that from now, a simple and easy comparison can be made between the prices offered and an assessment can be made as to how worthwhile it is to join this track,” Zaken said.
All customers will have the option of changing tracks at the beginning of each calendar month on condition they inform their bank in advance. The fee will be charged on a monthly basis at the start of each month for the preceding month.
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