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2012-03-22

Prohibition on Marketing Credit for Financial Asset Purchases

The Supervisor of Banks issued regulations to address conflicts of interest and customer protection risks associated with marketing financial assets through credit. The rule explicitly prohibits banking corporations from initiating contact with customers via any marketing or advertising campaign to encourage the purchase of financial assets using credit. This ban encompasses all forms of promotional outreach, including branch-level campaigns, circulars, and verbal guidelines issued by management.

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Supervisor of Banks: Proper Conduct of Banking Business (12/95) Providing Credit for the Purchase of Financial Assets Page 455- 1 ONLY THE HEBREW VERSION IS BINDING PROVIDING CREDIT FOR THE PURCHASE OF FINANCIAL ASSETS Introduction

  1. In view of the problems which may arise as a result of marketing financial assets by extending credit for their purchase, as regards both the benefit of the customer and the conflict of interest for the banking corporation, I have issued the following regulation. Definitions
  2. “Financial assets” - As defined in the Banking (Service to Customers) (Investment Counselling) Regulations, 5746–1986, except for a deposit in a provident fund and pension fund. Credit for purchase of financial assets
  3. A banking corporation shall not initiate contact with a customer by means of a marketing/advertising campaign to encourage the purchase of financial assets using credit for this purpose. For this purpose, a marketing or advertising campaign also includes a marketing or advertising campaign at the level of branch or regional management, sending a circular to branches, or issuing verbal guidelines to branches.

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