Further to a High Court ruling and a Banking Supervision directive-The process of amending the Standard Contracts: Opening a Checking Account in the Banking System was completed on April 1, 2011. The Banking Supervision welcomes the successful conclusio

03.04.2011
 
Further to a High Court ruling and a Banking Supervision directive––The process of amending the Standard Contracts: Opening a Checking Account in the Banking System was completed on April 1, 2011. The Banking Supervision welcomes the successful conclusion of this process and considers that the new contracts will be fairer to banks’ customers.
 
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The Banking Supervision instructed all the commercial banks to amend their contracts relating to opening a checking account. With the ending on April 1, 2011 of the transitionary period granted to the banks to make the amendments, new customers will sign the revised contracts. These contracts are fairer to the customers, and will no longer contain the unfair clauses which the court ruled should be removed or amended.
The amendment to the contracts have been implemented according to the principles laid down by the High Court in its ruling, which referred to the Bank Leumi contract for opening a checking account. This ruling was made following an appeal by the Attorney General and Bank Leumi against a ruling of the Standard Contracts Court.[1]
The Supervisor of Bank’s directive extends the High Court decision regarding Bank Leumi to the whole banking system, because the contracts for opening checking accounts in the other banks contained clauses similar to those ruled upon by the court.
The process of amending the contracts for opening checking accounts started in 2005, following the ruling of the Standard Contracts Court.[2] At that time the Supervisor of Banks instructed the banks to remove or amend the various clauses in their contracts regarding which the appeal had been made. Accordingly, among other things, the clauses dealing with credits for checks, third party power of attorney, burden of proof, banking secrecy, legal costs, etc. were amended.
Currently, as part of the completion of the process of amending the banks’ standard contracts, the clauses that deal with, among other things, the obligation to keep checks, the obligation to read notifications sent by the bank regarding a customer’s account, and the obligation to respond to such a notification if it contains an error, clauses that limit the bank’s liability for damages suffered by a customer resulting from various services provided by the bank, etc., will be amended.
This completes the long process that began in 1997, when the Attorney General asked the Standard Contracts Court to remove unfair clauses in the Bank Leumi Le-Israel B.M. contract for opening a checking account, a process in which the Bank of Israel was also a party.
The ruling of the Standard Contracts Court and the High Court appear in the Bank of Israel's website, (in Hebrew). In addition, the banks have been asked to notify their existing customers of the ruling on this subject, via the home page of their websites, and also by means of the statements of account they send to customers.
 
[1] Civil Appeals (C.A.) Nos. 6916/04 and 7680/04, Bank Leumi Le-Israel B.M. v. the Attorney General and the counter-appeal.
[2] Various Appeals (V.A.) No. 195/97, the Attorney General v. Bank Leumi.
 
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