developing· Economy· Updated
Israel's Capital Markets Authority Bans Perks for Mortgage Advisors
Israel's Capital Markets, Insurance and Savings Authority has issued a final directive banning non-bank credit companies from offering mortgage advisors and insurance agents any commissions, grants, prizes, or other benefits, such as overseas trips, in exchange for client referrals.
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What happened
- 01Israel's Capital Markets Authority banned non-bank credit companies from offering perks and commissions to mortgage advisors starting January 2027.
- 02The directive aims to eliminate conflicts of interest where advisors might favor lenders offering higher rewards over better client deals.
- 03Prohibited benefits include cash, prizes, and overseas trips to destinations like Las Vegas, Ibiza, and Corfu.
- 04Credit companies are forbidden from covering flights, travel, or accommodation for professional training and conferences to prevent disguised vacations.
- 05The new regulations place greater independent responsibility on non-bank credit companies for loan underwriting and verifying repayment ability.
- 06The Capital Markets Authority also published draft rules to apply similar restrictions to institutional entities.
The new regulations, which take effect in January 2027, aim to end a widespread industry practice where companies competed for business by offering advisors lucrative incentives, including vacations to Las Vegas, Ibiza, and Corfu. This practice created a conflict of interest where advisors could prioritize their own financial gain over the best interests of their clients.
Under the new rules, the definition of prohibited benefits is broad and includes indirect compensation through third-party companies. While credit companies may still sponsor professional training and conferences, they are strictly forbidden from covering flights, travel, accommodation, or hospitality, preventing these events from serving as disguised vacations.
Additionally, the directive establishes that credit companies will bear independent responsibility for underwriting loans, which includes verifying a client's repayment ability and assessing collateral. In parallel, the authority has released draft regulations to apply similar restrictions to institutional entities.
Summarized by baba from the reports of 3 newsrooms. Updated
Latest report: Globes. Read Globes’s originalThe coverage
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