Bank Discount refunds NIS 1M over double mortgage fees

Tel Aviv District Court Deputy President Judge Rachel Barkai has approved a class-action settlement against Bank Discount over excessive fees charged on early repayment of mortgage loans. Under the settlement, the bank will refund an estimated NIS 950,000 to tens of thousands of customers.

The lawsuit, filed by Hagit Timsit, alleged that Bank Discount unlawfully charged a NIS 60 operational fee for each separate track within a single mortgage loan, such as fixed-rate, prime-rate or foreign-currency-linked tracks, instead of charging a single fee for the entire transaction. The plaintiff argued that this billing method resulted in duplicate and illegal charges to the bank's customers.

Following a directive from the Supervisor of Banks, Discount stopped the practice in September 2021. After intervention by the Attorney General and a recommendation from the court, the bank agreed to raise the refund rate from 60% to 75% of the excess fees collected, plus interest and linkage differentials.

Who is eligible for a refund?

The eligible group includes any customer charged an operational fee exceeding NIS 60 for early mortgage repayment between 26 October 2016 and September 2021. Tens of thousands of customers were affected by the duplicate billing system.

Customers with an active account at the bank will receive the money directly into their bank account within 90 days of the settlement's approval. Customers who have closed their accounts will receive a bank cheque by post to their address on file in the bank's systems.

The settlement marks an important precedent in the banking sector and underscores the importance of oversight on banks' fee collection practices. In recent years, several class-action lawsuits have been filed against banks over excessive fees, and this settlement joins a series of refunds to customers harmed by problematic billing practices.

Bank Discount, one of the largest banks in the economy, has been undergoing significant organisational changes in recent months. This week, the merger of Bank Mercantile with Bank Discount was approved, designed to strengthen the Discount Group's competitive position in the changing banking environment.

Customers who are unsure whether they are part of the eligible group are invited to contact Bank Discount's service centre for clarification. It is important to ensure that address details are up to date in the bank's systems to guarantee receipt of the refund on time.