The Ministry of Finance decided to make a distinction between the large and medium banks in relation to pension advice for salaried employees. The plan gives an advantage to smaller banks in their access to households and salaried employees. "You cannot yell from morning to night, centralization, centralization, and then when the moment of truth comes along and you must tackle the centralization, you get cold feet," say Ministry of Finance Officials. "The distribution system is problematic and offers an advantage to the larger banks. This is a historic opportunity for affirmative action for the smaller banks." The medium sized banks will be permitted to give pension advice to all types of customers; salaried and self-employed, regarding all types of financial instruments: pensions, provident funds, advanced training funds and life insurance, as soon as they meet regulatory conditions, in other words, after the sale of their provident funds.
The larger banks, Bank Leumi (TASE: LUMI) and Bank Hapoalim (LSE: BKHD; TASE: POLI) would be prohibited from advising salaried employees on pensions and life insurance for three to four years.
The Ministry of Finance will act to change the law which prevents banks from giving life insurance advice until 2010-2012, and will enable their immediate entrance into the field. It will set the distribution commissions from life insurance at 0.25%. The banks will commit to not take purchase and sale commissions from their customers, only from the producers.
Published by Globes [online], Israel business news - www.globes.co.il - on December 21, 2006
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