Discount Bank to Refund NIS 950,000 in Mortgage Fees After Class Action Settlement

The Tel Aviv District Court has approved a settlement in a class-action lawsuit against Discount Bank, which accused the bank of overcharging operational fees for early mortgage repayments. Under the settlement, the bank is expected to return approximately NIS 950,000 to eligible customers.

The lawsuit, represented by attorney Arnon Landa, alleged that the bank illegally charged a NIS 60 operational fee for each loan "track" when a mortgage was repaid early, instead of a single fee for the entire early repayment. The claim was that different interest rate options or currency linkages within a single mortgage should not incur separate fees.

Discount Bank argued that the claim was moot because, since September 2021, it had been charging only one fee per early repayment, following a directive from the Supervisor of Banks. The bank also contended that these were distinct loans, not merely different tracks of one loan, justifying separate fees.

The court's ruling noted that Discount Bank ceased the practice after the Supervisor of Banks' directive on September 13, 2021. The directive stated that even if a loan comprises multiple indexation tracks, only one operational fee should be charged for an early repayment.

According to the settlement, customers who were overcharged between October 26, 2016, and the Supervisor's directive will receive 75% of the excess fees, plus linkage and interest. Payments will be made directly to active mortgage accounts within 90 days of the settlement becoming final, while checks will be sent to holders of closed accounts within 30 days. The parties are to report on the settlement's completion by mid-December 2027.