On June 1, 2017, the amendment to the Banking (Service to Customer) Law, 5741-1981, went into effect. The amendment requires banking corporations to attach to their advertisements and various means of marketing that encourage customers to take out loans, a warning in the following formulation: “Failure to repay the loan is liable to lead to interest on arrears being charged and Execution Office proceedings”. A similar directive was imposed on nonbank credit providers as well in legislation relevant to them. The Law was intended to lead customers—not all of whom have financial knowledge or understanding—to consider their ability to repay the loan, and to enhance the awareness of the economic ramifications that could occur as a result of failure to repay the loan. The Law is all the more important in view of recent years’ rapid increase in consumer credit from banks and nonbank institutions, which raises the risk to households in this area.

Consumer credit has been a focus of the Banking Supervision Department’s work in recent years. The Banking Supervision Department sees great importance in fair marketing of consumer credit, and works to prevent aggressive and pushy marketing of credit to customers.


In addition to the audits that were carried out regarding consumer credit, the Banking Supervision Department conducted enforcement checks at all the banks and credit card companies, in order to examine if they are acting in accordance with the amendment to the Law. The Banking Supervision Department found that Israel Discount Bank Ltd. and Leumi Card Ltd. did not comply with the provisions of the Law, and imposed a financial sanction of NIS 750,000 on Israel Discount Bank and NIS 1,500,000 on Leumi Card Ltd., due to the publication of marketing videos encouraging the taking out of loans, without attaching the requisite warning. In accordance with the Law, the maximum amount of the financial sanction that can be imposed for such a violation is NIS 750,000. At Discount Bank, the amount is in regard to one such violation in respect of one advertisement, and at Leumi Card the amount relates to two violations in respect of two advertisements. In both cases, the maximum financial sanction possible under the Law was imposed. Although violations were found, the Banking Supervision Department was impressed that both the entities took actions to rectify the deficiencies that arose from the enforcement check and to prevent their recurrence, and invested resources for the purpose of implementing the amendment to the Law.

Attached are the decisions regarding the imposing of the financial sanctions.


Dr. Hedva Ber, the Supervisor of Banks, said, “The Banking Supervision Department works with a range of tools to ensure the fair marketing of consumer credit. The sanctions are intended to convey a clear message to all lenders that they have to ensure responsible marketing of credit to households. While the competition and availability of consumer credit are increasing, and there are advantages in that for households, proactive marketing of credit incorporates risks as well to households, and in particular to households with limited economic ability that are liable to be enticed to take credit at a level that is too high relative to their abilities.”