"Supervisor of Banks Rony Hizkiyahu's bank fee reform is fundamentally flawed," declared Antitrust Authority director general Ronit Kan today.
According to Bank of Israel figures, following the bank fee reform, the average cost of managing a checking account will be NIS 24 per month, compared with NIS 24.50 before the reform came into effect. The average saving is therefore NIS 0.50 per month, for a total of NIS 6 per year.
In addition, the minimum fee has risen from NIS 10 to NIS 11-14, depending on the bank, which is double the fee for a transaction carried out by a bank clerk. The core of the new bank fee table is the reduction of the number of fees in the retail sector from 198 to 72.
Kan says that the reform fails to provide an adequate response to the market failures in the banking sector, and that there was no reason to raise the bank fees that were kept. She adds that the transparency in fees is liable to cause price fixing.
Kan said, "The Parliamentary Inquiry Committee for Bank Fees also said that in markets with competition problems, transparency on prices would increase collusion, not competition. In a market with competition failure, price controls do not provide a competitive response, but a regulatory one."
Kan also commented on the entry of an Internet bank into the market. "In my opinion, the entry of an Internet bank into the banking market can provide a competitive response. I think that there is room for a broad opening for such entities, in terms of regulation."
Kan is a member of both the Ariav capital market reform committee and the subcommittee on household credit. Kan and Supervisor of Capital Markets, Insurance and Savings Yadin Antebi have prepared a proposal for promoting household credit.
Published by Globes [online], Israel business news - www.globes-online.com - on July 1, 2008
© Copyright of Globes Publisher Itonut (1983) Ltd. 2008