Bank of Israel: There is no reason for the foreign currency conversion fee to be any different for the purchase of foreign currency for personal needs.
The Bank of Israel has torpedoed an initiative by Israel Securities Authority chairman Shmuel Hauser, deciding that the banks can charge customers a foreign currency conversion fee on the purchase of foreign mutual funds. During a stormy meeting at today's Knesset Finance Committee meeting on amendment 15 to the Joint Investment Trust Law (5754-1994), Supervisor of Banks David Zaken opposed the initiative to ban the banks from charging this fee. The Bank of Israel is responsible for setting fees, and its opposition means that the issue is off the agenda.
The Banking Supervision Department said that there was no reason for the foreign currency conversion fee to be any different for the purchase of foreign currency for personal needs from the purchase of foreign currency to buy foreign mutual funds. The essence of the fee is the purchase of foreign currency, not the reason for the transaction.
This is not the first time that the Bank of Israel and the Securities Authority have clashed. In December, "Globes" reported that the Bank of Israel torpedoed a Securities Authority initiative to cancel custodian fees on mutual funds. The Securities Authority wants to prevent the banks from collecting the conversion fee so that the bank will have no reason to prefer selling foreign mutual funds over Israeli funds, because it collects an additional fee on the sale of a foreign fund.
Published by Globes [online], Israel business news - www.globes-online.com - on January 7, 2014
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