“A free and proper economy is based on transparency, not lies”


Strong opposition in the financial system, the Bank of Israel and the Ministry of Justice to the proposal that data on borrowers who have run into difficulties following the Corona crisis will be deleted from the credit database so that their rating is not harmed. This morning (Monday), a bill initiated by the chairman of the Finance Committee, MK Moshe Gafni, will be discussed in the Economics Committee, according to which the credit database will not include data collected for four months between March 1 and July 1. Data from this period that have already been transferred will be deleted. The bill came up for discussion in the Ministerial Committee on Legislative Affairs earlier this month and was approved for preliminary reading.

The intention of Gafni and MK Yaakov, who submitted the bill, is apparently good – to help borrowers who have problems in the crisis, not to become a credit-excluded population. However, there is rarely a consensus in the financial system and among regulators that this bill could have dramatic consequences. And to credit crunch.

Moshe Gafni at a meeting of party leaders with Israeli industry

Chairman of the Finance Committee, MK Moshe Gafni. The financial system is hoping for a compromise, which will bury the law

(Photo: Moti Kimhi)

“Solving problems by erasing history is a bill that is appropriate for a communist state,” Micha Avni, CEO of the Peninsula Group and chairman of the Association of Non-Banking Credit Companies in Israel, told Calcalist, which does not spare harsh words. According to Avni, “a free and normal economy It is based on free information and transparency, not lies. “

Zoharit Yogev, head of risk management at Bank Leumi, also opposes the move. “It should be understood that deleting all data means deleting good data for some customers,” she explains. “The bank will be much more suspicious and strict, and for risk management reasons any offer will be priced higher, simply because there is no information. I have no way of knowing what happened to this person. In the last three or four months, he may have been an excellent customer but I have no information about it so I will be more suspicious of everyone. “

Not only lenders oppose the offer. The Bank of Israel also forwarded a detailed document justifying its opposition to the deletion of the data, and wrote that this could lead to a credit crunch, and that even in other countries in the world with a credit database, no data deletions were carried out following the corona crisis.

After the bill passed the Ministerial Committee, it was determined that it would be advanced after a discussion between the Ministries of Justice and Finance, when as far as is known the professional echelon in both ministries opposes the proposal. Calcalist has learned that against the background of the objections, negotiations are underway between Gafni and the Ministries of Finance and Justice in order to reach a compromise.

If it was a bill by one of the Knesset members, it would probably have been rejected in light of the objections, but since the proposer of the law is the chairman of the Finance Committee, it is a more complex situation, especially in the current political situation of an unstable coalition. Gafni needs approval of the budget, keeps the cards close to his chest and only agreed to say that “the issue is still under discussion and therefore we will not address it at this stage.”

However, the Ministry of Justice explained why this is a problematic proposal and should therefore be opposed: “The bill could hurt both creditors and customers seeking credit, especially during this period, when customers are required for credit,” the Justice Department said in response to Calcalist’s request.

The Ministry of Justice also says that “not including all the information in the database will lead to the database being missing, and will cause the lenders not to want to take a risk, and inevitably, will see customers as not paying the debts. Lack of information in the database will not improve the situation of creditors. It will actually make creditors see all customers as ‘suspicious’ of non-compliance. Due to the lack of information, there is a fear that creditors will assume that customers do not meet the payment of loans and increase the cost of credit accordingly. According to the decision of the Ministerial Committee, we are in touch with the proposing MK. In order to reach an agreed wording, for the benefit of the customers. “

As stated, the financial system is keeping an eye out and hoping that a reasonable compromise will be reached and that the original bill will not move forward. Micha Avni claims that “what happened to someone during a crisis is important information to understand the quality of the contract signed with him and make the right credit decisions. Knowing who is responsible and who hastily is important not only to the lender today or tomorrow, but also to those who give credit in two years. “Those who acted responsibly deserve more credit at a lower price. The lack of information will create a vacuum that no serious body can handle.”

Since the start-up of the credit institution, the financial entities have relied on it significantly, mainly in the provision of pre-approved digital credit, which is cheaper and more accessible to consumers. Beyond the high costs, Yogev explains that in the absence of data, customers will not be able to receive offers digitally and will have to go to the branch, so the customer experience will also be affected by the move.

“This is a sweeping decision from which there is no way back,” warns Yogev, who says that if the law is passed, new customers will have great difficulty getting credit from the banks, since they will not hold any information about them. “We will see less credit given to customers and what is given will not be priced correctly.”

Yogev added that “the lack of data can cause us to give more credit to leveraged and problematic customers – which will only put them in a bigger pit and complicate them even further, this is irresponsible conduct on the part of the bank but it can happen if we do not have data.”

Another danger posed by the bill is harm to competition, especially for non-banking organizations. While each bank holds a history of data and operations on each of the customers, non-banking organizations do not have such a listing, which in the absence of a government credit database completely blinds their eyes to the granting of credit. Therefore, in the expected position today of the Bank of Israel, it will propose to publish the data under a marking that categorizes the event – for example, loan arrears – as one that occurred during the period of the corona crisis.

“This is a move that will hurt the economy, that will reduce competition, bring the market back and again leave the cards in the hands of the banks,” Dr. Gal Aviv, CEO of Blender, told Calcalist.

Blender adds that “the banks are exposed to information about borrowers’ credit ratings for the period from March to July, and there is no doubt that they will use it. The Bank of Israel is right in claiming that this move will only reduce supply and credit crunch. “In the face of the banks’ monopoly, however, such a move will make us hesitate due to the lack of sufficient information. And again, the one who will be harmed is the citizen.”

“As a banker, it scares me a lot more when you decide to delete the data completely than to say – these are the data, let’s deal with them,” Yogev emphasizes. “The information should be put in the database and let the bank exercise discretion under the heading of the Corona period.” However, Avni actually opposes this: “There is no need to hide data, no marking and nothing. People are old and responsible enough to know that 2020 was the year of Corona and everyone should give it the weight it deserves. If the state wants to deepen aid for the weak and injured, it should To help where necessary and not to mess with lies. “

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