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As part of the implementation of the recommendations of the Team to Increase Competitiveness in the Banking System, the Supervisor of Banks, David Zaken, today published a draft amendment to Proper Conduct of Banking Business Directive 439 “Debits by Authorization”, which sets out the process of establishing authorized debits and transferring them from bank to bank.
An authorized debit is a method for making payments, by which a customer gives authorization to his bank to transfer money to beneficiaries at their request.  These beneficiaries are any entities or businesses to which money/payment is transferred on a regular basis, for instance, authorities, communications companies, the Israel Electric Corporation, educational institutions, and so forth.
The process of transferring debit authorizations from bank to bank has been identified as a complex process that sometimes involves excessive bother on the part of the customer and, as such, as one of the main impediments faced by customers who wish to transfer their activity from one bank to another and to improve the terms of their association with the banks.
In order to improve and streamline the process of transferring existing debit authorizations from the customer’s old bank to the new one, a new process has been set up that will be executed with minimum effort on the part of the customer, and in a relatively short period of time.  All that is required of the customer is to submit a request to transfer debits to the new bank, and to attach a report of debit authorizations that will be produced by the old bank.  (A customer may also, should he be so interested, grant his approval to the new bank to produce this report for him.)  The rest of the process will be done for the customer by the new bank, rather than the currently existing process in which the customer must approach each business to which he has previously issued an authorization, and reissue the authorization on his own.
In addition, as part of the draft amendment, the aim of which is to streamline and simplify the process of establishing new authorizations, the need to use an authorization signed by the customer and for the bank to keep a copy of it in order to establish an authorized debit has been canceled.  Furthermore, the draft sets out that the customer may submit a request to establish an authorization through a variety of communications channels, among them the bank’s Internet site, fax, mail, and the bank’s branch.
Supervisor of Banks David Zaken notes: “The aim of the amendment is to remove the impediments that have existed until now, and to simplify the process of moving debit authorizations for the customer.  The fact that a customer can take minimal action to transfer his activity from one bank to another, without needing to come to the bank branch and without excessive bother, is a further significant step in increasing competitiveness in the banking industry.”
In addition, the following are other changes in the draft directive: 


  1. The existing requirement in the current text of the directive, that if a customer does not issue a copy of the original authorization from the old bank to the new one within six months, the new bank will not be permitted to continue debiting the customer’s account until an original authorization is issued, has been cancelled.  As stated, this requirement made it necessary for the customer to approach each one of the businesses that had been credited subject to this authorization in order to obtain new authorizations and submit them to the bank.  In this way, a significant regulatory impediment has been removed.

  2. A customer will be permitted to cancel a debit no later than three business days after the date of the debit, rather than the currently existing situation in which a debit can be cancelled no later than one business day before the date of the debit.

  3. A customer will be permitted to demand that the bank cancel a debit at any time if the debit is not consistent with the date on which the authorization expires, rather than the currently existing situation in which this possibility is restricted to just 90 days after the date of the debit.


The proposed amendment will take effect as of March 1, 2015.