Providing Information Through Electronic Means

Israel Bank The Superintendent of Banks Customer-Bank Department (Regulation Unit Customer-Bank)

---

Fax: 02-6669077 - Tel: 02-6552680 P.O.B 780, Jerusalem 91007

Vol. II No. 6669 August 4, 2013

Circular No. 2395-06

Subject: Providing Information Through Electronic Means

Instructions No. 420 ('General Banking Management') and No. 470 (Credit Card Companies)

Introduction

1. I have determined, after consulting with the Advisory Committee on Banking Matters and with the approval of the Governor, the following instructions regarding matters concerning banking.

2. The instruction previously in force, which limited the sending of notifications to customers through electronic means (Certain Notifications Sent to Customers (Adequate Disclosure) (General Banking Management) Instruction, 5752-1992), applied only to specific notifications detailed in the rules, and did not apply to the general rule regarding notifications. It also did not apply to additional notifications specified in the General Banking Management Instructions.

3. The existing disclosure obligations that were established in the past were based on the conservative assumption that the available technological means were not compatible with those that stood at the disposal of the banking authority at that time, and that sending a letter via postal mail was preferable to sending via electronic means.

4. However, given the proliferation of reports sent to customers and the costs associated with producing and sending them by postal mail, technological advancement may lead to improved customer service and reduced costs. This amendment to the instruction was made in light of the desire of many customers to receive these notifications via electronic means rather than postal mail, for reasons such as improving information availability, facilitating its preservation and identification, and protecting the environment.

Main Provisions of the Instruction

3. Section 3 of the instruction defines the notifications permitted to be sent through electronic means.

4. Section 4 of the instruction specifies the conditions under which a banking institution may send notifications to customers through electronic means.

5. Section 5 of the instruction specifies the cases in which a banking institution is required to send notifications to customers through electronic means concurrently with postal mail.

Explanatory Notes

The most significant change made in the framework of this amendment is the conversion of the default rule, pursuant to which all notifications sent pursuant to the General Banking Management Instructions, and also pursuant to rules established under the Credit Card Law, 5741-1981 (including regulations established thereunder, except for credit card companies pursuant to the Credit Card Law, 5746-1986), can be sent through electronic means. Unlike the original text of the instruction, this is not a blanket rule, but rather specifies certain notifications in light of their importance. Section 5 stipulates that when the customer has requested the electronic means for sending them, the banking institution is required to send the notifications listed in that section concurrently via postal mail. It is emphasized that this section does not impose an obligation on the banking institution to send the listed notifications via postal mail, but rather stipulates that it must also send the listed notifications via postal mail.

Section 6 of the instruction establishes a duty for the banking institution to send a notification to the customer via postal mail if the customer does not log in to the banking institution's website or open the electronic mail, or does not provide explicit consent to continue receiving the service via a recorded call or automated telephone response. The banking institution is required to send notifications to the customer's address as recorded in the institution's documents. This section also addresses the previous reference to the requirement for control by the credit card company regarding the sending of the monthly statement.

Explanatory Notes

It can be assumed that if a customer has requested to receive notifications through electronic means, they will regularly log in to the banking institution's website or perform the aforementioned actions. Therefore, in the absence of explicit consent from the customer to continue receiving the service during a period of 9 months, the banking institution is required to send a notification to the customer via postal mail, clarifying that if they do not log in to the banking institution's website or open the electronic mail, or do not provide explicit consent to continue receiving the service via a recorded call or automated telephone response, during a period of an additional 3 months from the date of sending the notification, the service will be suspended, unless the aforementioned conditions are met at the end of this period. The service will be suspended as required.

In light of the fact that customers of banks tend to view the monthly statement of the credit card company on the banking institution's website instead of the issuance arrangement partner's website, the credit card company was given the option to send a notification to the customer at the end of each calendar year, via postal mail, regarding the continuation of receiving the monthly statement via the banking institution's website, if the customer requested it.

For accounts held only for the purpose of other accounts, such as housing loans, etc., the login to the banking institution's website or electronic mail is not high frequency. Therefore, a longer period was established for the banking institution to act before suspending the service, as mentioned above. It is clarified that the customer's login to the banking institution's website implies login via a password/code.

Section 7 of the instruction relates to the termination of the service by the customer.

Explanatory Notes

It is clarified in this section that the customer may, at any time and in any manner, choose to terminate the service, as explicitly stated in Instruction No. 357 of the General Banking Management Instructions.

Section 8 of the instruction establishes provisions regarding joint accounts.

Explanatory Notes

Provisions were established in the instruction regarding the request for providing information through electronic means, in light of the exclusivity of the joint account. This includes changing the electronic mail address for receiving electronic notifications.

Section 9 of the instruction deals with the manner of presenting the sent information through electronic means.

Explanatory Notes

It is determined that every notification sent through electronic means must bear a subject line reflecting its content. This will facilitate customers in retaining and locating the received notifications.

Section 10 of the instruction deals with accessibility to notifications.

Explanatory Notes

It is clarified that when a legal proceeding is pending between a customer and a banking institution, the customer is entitled to access the notifications sent to him via electronic means that were requested during the period preceding the legal proceeding.

It is further clarified that after the contractual relationship has ended, if the customer requested to receive notifications sent to him via electronic means, the banking institution will allow the customer access to the notifications sent to him via electronic means during a period of at least six months preceding the date of termination of the contractual relationship, or alternatively, for a period of six months from the date of termination of the contractual relationship. The banking institution is required to provide the customer with one copy of each of the requested notifications, without charge, once. The rationale underlying this instruction is to facilitate the transfer of accounts from one bank to another, by removing the barrier of fear of information loss from the customer to the bank.

Section 11 of the instruction deals with disclosure to the customer in the contractual agreement.

Explanatory Notes

In light of the importance of the matters specified in the instruction and the consequences involved for the customer, it is clarified that the banking institution is required to bring them to the customer's attention within the framework of the contractual agreement. The aforementioned instruction must be included in contractual agreements signed, but banking institutions are required to act in accordance with its principles from the date of its commencement, also regarding existing agreements.

Appendix 12 to Instruction No. 470 ('Credit Card Companies') will add Section 11: "Providing Information Through Electronic Means" (No. 420).

Commencement

13. This instruction shall commence on the date of its publication.

Update of the Compilation

14. The following instructions shall update the pages of the compilation of the General Banking Management Instructions: