New Banking Supervision Directive on opening and managing a current account with no credit facility


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The Supervisor of Banks has issued a Directive defining the instances in which a banking corporation must accede to a customer’s request to open a current account with no credit facility.  This measure will ensure that the banking ID card that the Banking Supervision Department intends to launch will not negatively impact the ability of weaker population groups to open and manage a current account of this type.
 
Supervisor of Banks David Zaken notes: “A current account is an essential service, which constitutes a basic means of managing most of the financial activities of any household.  The objective of this Directive is to ensure that weaker population groups will also be able to manage a current account with no credit facility, make use of a variety of means of payment, and keep track of their account independently and efficiently.”
 
The Supervisor added: “In parallel with our efforts to implement the banking ID card, which will include a credit rating for the purpose of increasing competition in the banking system, we are taking additional measures with the aim of removing the concern of excluding weaker population groups from obtaining basic services in the banking system.”
 
In accordance with the Banking (Customer Service) Law, the banking corporations are obligated to open a current account with no credit facility (as opposed to granting credit, which the business corporation may refuse to grant based on its business considerations), and they are permitted to refuse a request to open such an account only for reasonable cause.  In the framework of the new Directive (Proper Conduct of Banking Business Directive 422), the Supervisor of Banks has set out those instances in which, only should they be the case, the claim of “reasonable refusal” will not be accepted, and the banking corporation will be required to open an account:
 

 

  1. A restricted customer, or a customer restricted under aggravated circumstances, or a customer restricted under special circumstances, as defined in the Checks Without Cover Law, 5741–1981, including a customer who was previously restricted pursuant to the provisions of that law;
  2. A customer in bankruptcy proceedings, including a customer who was previously in bankruptcy proceedings;
  3. A customer on whose accounts lien has been placed;
  4. A customer who is conducting or has in the past conducted legal proceedings against another banking corporation originating from the collection of a debt.

 

The Directive defines the means of payment and services that the banking corporations will, as a rule, be required to make available to the customer:

 

·         Making payments by way of debits by authorization;

·         The use of immediate charge cards;

·         The use of cash withdrawal cards;

·         Information retrieval services by way of a service outlet at a branch;

·         Access to the account by way of the bank’s website.

 

The banks are also required to publish on their website this list of means of payment and services available to its customers, and to provide a customer who has submitted a request to open an account and has been refused with a written decision within 5 business days from the date the request was submitted.

The Directive will come into force gradually during the next half year, while the banks’ requirement to open an account when the reasons mentioned in the Directive are in place takes effect immediately.

As a complementary step to the Directive, the Banking Supervision Department intends to gather information regarding instances in which the bank has refused to open an account with no credit facility, and their characteristics.