Finance Minister Yuval Steinitz is expected to ask the Knesset Finance Committee to approve regulations tomorrow lowering the commissions that banks earn for marketing and distributing mutual funds.
A lot of money is at stake: The banks collect marketing and distribution fees totaling about NIS 500 million annually. If passed, the amendment would reduce the banks’ cut by about NIS 100 million a year.
The committee is currently operating with a temporary roster until a government is formed following last January’s election. Once a new cabinet is in place, permanent members of the committee will be appointed.
It’s not clear whether the committee in its current composition will approve Steinitz’s request. Thirteen of the 17 members were not present when the Finance Committee took up the issue several months ago. And four members from the Labor Party and Yesh Atid are newly elected MKs.
Committee chairman Moshe Gafni (United Torah Judaism) says the measure will only be approved if Israel Securities Authority chief Shmuel Hauser pushes for legislation that would also cut the amounts fund managers receive from investors in management fees.
Several months ago Steinitz and Hauser asked the committee to approve the change in bank regulations, but at the time the committee insisted on linking it to legislation cutting the mutual funds’ management fees. Due to the election, the legislation was put on hold, but the committee will be asked tomorrow to approve the bank fee reduction.
“The Finance Committee should approve the reduction in the [bank] commissions as soon as possible,” said Meretz party chairwoman Zahava Gal-On, saying it would lead to other fee reductions. She accused the outgoing government of cooperating with the banks on the issue.
Committee member Faina Kirshenbaum (Yisrael Beiteinu) has asked Gafni to cancel tomorrow’s meeting until the legislation on bank fees is advanced, saying the moves should be made together.
“Our goal as Knesset members is not to shift money from banks to investment firms, but rather to benefit the public and reduce management fees,” she said. “It’s not clear to me what the goal of the meeting is and what the urgency is to hold it at this time,” she said, since the management fees the mutual funds collect were not being cut.
Before the election, the banks, the Association of Banks in Israel and lobbyists all pressed legislators not to cut the commissions the banks earn on mutual fund sales. They said the rates banks get are low compared to rates in other countries, while the management fees the funds get are high. During the last Knesset, the legislators expected to pass legislation lowering the management fees the funds get.
In the end, Prime Minister Benjamin Netanyahu and the Knesset speaker at the time, Reuven Rivlin, decided not to push through the bill during the Knesset recess that preceded the election. They were concerned that the legislation would invite a flood of other bills submitted as private members’ bills.