The Legal Adviser to the Government submitted today (Tuesday) to the Central District Court in Lod an objection to a settlement in two class actions, one against Bank Hapoalim Ltd., and the other against the First International Bank of Israel Ltd.
The action was filed with allegations of unlawful charging due to the incorrect classification of foreign currency transfer operations as "foreign trade" operations and the collection of an incorrect commission accordingly. The parties resorted to mediation procedures and as part of them the compromise arrangements were signed. The position of the Legal Adviser to the Government is that the arrangements should not be approved in their current form. .
Bank Hapoalim // Archive photo: Gideon Markovich,
As part of the class action, it is claimed that within the framework of a simple foreign exchange transfer, for which a normal foreign exchange transfer fee can be charged, both Bank Hapoalim Ltd. and the First International Bank of Israel Ltd. charged fees for them specifically under "foreign trade" operations, whose fees are higher .
This, when most of the transactions in question are for the purpose of purchasing products for personal use only.
Bank Hapoalim and the International Bank for their part argued that the actions taken should be classified according to their nature and purpose, and since they believe that these are foreign exchange transfers for the purpose of importing products to Israel, they should be classified as "foreign trade" and a fee charged accordingly.
The parties formulated compromise arrangements together, each in his own case.
The position of the legal adviser to the government is that they should not be approved in their current form.
The amount that is paid to the complainants
At the heart of the settlement are commitments for the future, and making restitution for the past.
The banks undertake, as a commitment for the future, to make a change in the special form that a customer must fill out in order to transfer foreign currency abroad, so that a rubric of "importing goods for personal use" will be added, which will be charged a normal foreign currency transfer fee. However, it will be clarified in the form that it is possible to choose In such an action only in relation to transactions whose amount is up to and including 20,000 dollars.
International Bank branch // Photo: Ami Shoman,
And looking at the past, the banks undertake to refund a total amount of NIS 1,400,952 to the complainants, which is derived from the refund of 100% of the difference in fees charged in the relevant period for foreign exchange transfers made for the purpose of purchasing goods abroad for personal use.
In both settlement arrangements, the amount is final, and linkage differences and interest will not be added to it.
The position of the Legal Adviser to the Government is that certain parts of the compromise arrangements give rise to a difficulty that does not allow them to be approved as they are.
The proposed future regulation regarding the classification of foreign exchange transfers for commission purposes according to the amount of the transfer, which is used as an indication of the purpose of the transfer, and not according to the essence of the service provided to the customer is illegal. This difficulty is strengthened in view of the fact that the banks refrained from clarifying what additional service they provide to their customers as part of a foreign exchange transfer in the scope of the above on $20,000.
Therefore, and according to the interpretation of the commission rules and the principle according to which it is not possible to approve a compromise settlement that is contrary to the provisions of the law, in the position of the legal adviser to the government, there is no reason to approve the settlement.
Also, according to the compromise arrangement, bank customers whose accounts will be closed at the time of restitution will not be entitled to personal and direct restitution, and the payments due to them will be transferred to a class action fund.
This causes difficulty because a remedy in the public interest, as an alternative to individual restitution, is only allowed if the court finds that individual restitution is impractical.
The banks did not present any reasoning why in this matter the individual recovery is impractical for group members whose accounts are closed.
That's why you should first consider adding a mechanism for direct refunds to group members whose accounts are closed.
Furthermore, the settlement in one of the lawsuits prevents the members of the group who made foreign exchange transfers for the purpose of carrying out commercial transactions from filing personal or representative lawsuits for the claims raised in the legal proceedings (court action), even though they were not given any compensation.
In addition to this, the determination that linkage differences and interest will not be added to the settlement amounts causes difficulty in light of the chances and risks inherent in the proceedings discussed in this matter.
The fees that must be returned by virtue of the settlement arrangements were collected over seven years, and in general, the actual restitution is not immediate (within 6 months from the date of approval of the settlement arrangements).
In these circumstances there is difficulty in returning without attachment at all.
And also, making the compromise arrangements conditional on not appointing an inspector - is illegal.
In both settlements, it was determined that if the court decides to appoint an inspector, the parties can withdraw from the settlements, but this condition is illegal.
According to the Class Actions Law, the decision to appoint an inspector is at the discretion of the court.
Appointing an inspector is not a matter subject to the discretion of the parties to the settlement, and is an auxiliary means for assessing the reasonableness and fairness of the settlement.
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