The Supervisor Advances a Uniform Basket of Current Account Services
The Banking Supervision Department announces its intention to take a further step in improving competition and increasing transparency in the management of current accounts, through which it is initiating measures to set a uniform basket of services for managing current accounts. The purpose of this step is to obligate every bank to offer its customers one price for all basic services involved in the management of a current account, thereby making it significantly easier for the customer to compare the prices of services among banks. The Banking Supervision Department will obligate the banks to set a single total price, but the pricing itself will be done by each bank on its own.
Currently, there is a fee for each action in a current account, whether the action was teller-executed or customer-executed. (A list of actions included in the definition of actions in these channels can be found in Appendix A.) As such, the monthly payment changes each month according to the number of actions actually executed by the customer.
As part of this step, which is planned to take the form of an amendment to the Banking Regulations (Customer Service)(Fees), 5768–2008, the banks will be required to set a single price for managing a current account for three tracks: basic, expanded, and premium. Each track will include the actions that the customer may take per month in exchange for a pre-determined price.
- The basic track - will include a number of teller-executed transaction services and a number of customer-executed transaction services, and will reflect the actions of a customer with an average activity profile.
- The expanded track - will include an unlimited number of teller-executed and customer-executed transaction services. This track is mainly intended for customers who use a higher than average amount of these services.
- The premium track (expanded plus) - will include, in addition to the expanded track, services that are unique to each bank, with added value for the customer. As part of this track, each bank will be able to offer those services that are unique to it.
The banks will be required to offer the “basic track” and the “expanded track” as shelf products to their customers. Payment for the track will be on a monthly basis, at the beginning of each month for the previous month. Furthermore, a mechanism for determining a discounted price for customer-executed actions will be set.
The tracks will be added to the existing fee schedule at each bank, and will not replace the fees contained therein, such that the pricing of the services for a customer who is not interested in joining one of the tracks will remain according to the existing pay-as-you-go method. In any case, each customer will be able to move from one charge method to another at any time he chooses.
The tracks method will create a situation in which bank customers will be able to select from among various tracks in accordance with the activity profile in their current account.
Supervisor of Banks David Zaken notes: “This is a step whose purpose is to improve bank customers’ ability to compare, to increase price transparency, and at the end of the day, to encourage competition in the management of current accounts. This step is in addition to the series of steps derived from the recommendations of the Team to Examine Increasing Competitiveness in the Banking System, including steps to increase the ability to transfer a current account from bank to bank. The very fact that the Banking Supervision Department will set a list of tracks that the banks must offer their customers, where the list of services and actions in each track or the characteristics of each track are uniform, will lead to greater competition among the banks over the cost of each track.”
Appendix A – Common current account services that will be included in the tracks method
Teller-executed activity—Transactions conducted via a bank clerk, including through a manned telephone call center:
- Depositing cash
Customer-executed activity—Current account transactions not conducted via a bank clerk:
- Crediting an account through a clearing house