As of Tuesday, the treasury’s capital markets division becomes an independent body for the first time ever, no longer subject to approvals from the finance minister.
The new, independent agency will bring Israel into line with regulatory structures elsewhere in the developed world and make regulation of the capital markets and the insurance industry better and more efficient. The Organization for Economic Cooperation and Development had long urged Israel to spin off the unit.
“On a professional level we’re talking about a widening of regulatory authority because powers are being transferred from the Finance Ministry to the commission,”’ said one treasury official.
The Capital Market, Insurance and Savings Authority’s main task is to safeguard the interests of the insured and pension fund holders as well as ensure proper management, competition in the markets and encourage the use of new technology and innovative practices.
The new body will be headed by Dorit Salinger, who headed the treasury unit, for the two years remaining in her term. Under the law, the finance minister will be entitled to name the next commissioner for a five-year term, but otherwise the authority will be independent.
The authority will have its own budget, like a government ministry, with the commissioner responsible for it. With its own budget, the authority will enjoy greater independence and freedom of action.
“An undertaking like this gives the authority the ability to set its own priorities and to act without political interests getting involved,” said one treasury official.
Despite Finance Minister Moshe Kahlon’s support for granting the authority its independence, the law faced opposition in the Knesset, where MKsS sought to weaken it, for example, by demanding that circulars issued by the authority be approved by the finance minister – to enable lobbyists for the insurance industry and agents to have a bigger say in policy decisions.
Most of these efforts failed, but a few succeeded. For example, the law states that changes in charters for the new pension funds and provident funds must be approved by the Knesset Finance Committee, unless the change is mandated by an existing law.
Salinger also agreed that while she oversees insurance companies, she will have no power over the holding companies that control them.
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