Bank Moves Client's Apartment Sale Funds to Deposit Without Consent
A bank customer was surprised to find that funds from the sale of their apartment had been moved into a deposit account by the bank without their explicit permission. The customer discovered the money was unavailable for use and was informed by the bank that large sums are not typically left in checking accounts and that the funds were placed in a fixed-term deposit. This incident raises questions about who has the authority to decide how a customer's money is managed.
Bank of Israel regulations, specifically Directive 407, state that a banking corporation cannot make an investment for a client without their express consent. While a bank can offer investment options, it cannot execute them until the client accepts the offer. This directive was established to prevent banks from unilaterally deducting funds for savings or investments, emphasizing that the client must approve any such action, and mere silence is insufficient.
The bank is permitted to suggest options like a deposit account, explaining the benefits of earning interest on large sums. However, the decision on whether to open an account, the type of product, and the duration rests solely with the client. Moving funds from a checking account to a deposit can alter accessibility and may involve penalties or loss of interest if withdrawn prematurely, especially crucial for funds from a property sale intended for immediate use like purchasing another home or paying taxes.
An exception exists where a bank is required to invest funds if no customer instructions have been received for an extended period (10 months for checking accounts) and the bank cannot contact the client. However, the mere presence of a large sum in an account does not qualify as a lack of customer instruction or grant the bank authority to choose an investment product for the client. If no such exception applies, the bank can only offer suggestions, with the final decision belonging to the client.
Customers facing this situation are advised to immediately contact their bank in writing, requesting clarification and the release of funds, along with documentation of the alleged authorization. If the bank cannot provide proof of explicit consent or if an exception doesn't apply, the customer should not be held responsible for any costs incurred due to the unauthorized action. If the bank fails to resolve the issue, a complaint can be filed with the bank's ombudsman and subsequently with the Bank of Israel's consumer oversight unit.
