Non-Bank Mortgage Lenders Continue Luxury Advisor Perks Amid Regulatory Wait
Non-bank mortgage lenders in Israel continue offering extravagant perks like luxury trips to advisors, sparking ethical concerns and regulatory scrutiny over potential conflicts of interest.
While non-bank mortgage lenders await the Capital Market Authority's final decision on benefits and rewards for mortgage advisors, the celebration of perks—centered around trips abroad—is in full swing. Non-bank credit companies, competing for every client, are preparing to close the year with new promotions. "Fly to the most dazzling vacation in the City of Lights, Las Vegas," suggests Mimi Yashir. "Summer, sun, and Ibiza," writes Albert Mortgages. "Every deal brings you closer to New York," wrote LoanWise, and Gishrim Fund wrote, "Madrid is waiting for you."
About a year and a half ago, Calcalist exposed the huge scale of perks offered by companies in exchange for referring clients to them. The problem with this practice stems from the fact that there are currently no professional and ethical requirements for mortgage advisors, nor is there any supervision over them—such as avoiding conflicts of interest, so an advisor can collect fees from both the client and the company. In addition, over 60% of the public relies on advisors for what is likely the largest financial transaction of their lives, with usage rates among non-bank markets likely even higher.
Unlike banks, which are regulated by the Bank of Israel—prohibiting them from rewarding mortgage advisors—non-bank companies, regulated by the Capital Market Authority, can currently reward advisors with cash or prizes. The non-bank mortgage market turns over billions of shekels, with over 20 companies currently operating in it. Although this accounts for only about 1% of the banks' mortgage portfolio, these are the most significant transactions in households' lives.
Among quite a few players in the market, there is a consensus that the resulting equilibrium is ethically problematic—yet they are forced to offer rewards to advisors so as not to fall behind. In the non-bank market, which mostly attracts complex borrowers for whom banks cannot or will not issue loans due to regulatory limitations, advisory fees charged directly to clients can reach 30,000 to 50,000 shekels per file, and sometimes climb to hundreds of thousands of shekels. Alongside massive client payments, an advisor who markets enough loans enjoys commissions and flights from the financing body.
The Regulatory Delay and the Ongoing Risk
The result is a tangible danger that clients will be steered toward companies offering inferior or more expensive solutions simply so the advisor can hit million-shekel targets for their next flight. The flight promotions do not merely touch advisors on the fringes of the industry; as Calcalist previously exposed, senior figures in the Mortgage Advisors Association have also participated in these trips in the past.
To address this, the Capital Market Authority published a draft circular last May explicitly prohibiting financial service providers from giving any form of reward to representatives. The regulation is worded to cover all types of real estate-backed loans, including reverse mortgages—a sensitive field targeting an elderly population where the flight celebrations originally began. The public comment phase for the draft ended in mid-June 2026. Approximately three months have passed since the public phase ended, raising concerns in the industry that the authority is dragging its feet.
However, while one could argue the authority woke up late, the time elapsed since the directive's publication is reasonable relative to the pace of regulatory design in similar issues, as the process requires convening an advisory committee, holding hearings, and examining legal arguments from conflicting interest groups. If the directive is published in the coming weeks, it would actually represent a relatively short timeframe for such regulation.
The Double Price Paid by Vulnerable Borrowers
Until the mandatory directive is officially published, credit companies remain in a state of uncertainty, and the most vulnerable pool of borrowers continues to pay a double price. The trouble is that even if the Capital Market Authority approves the circular as worded, the regulation will only address eliminating incentives and conflicts of interest regarding credit companies.
The proposed legislation to regulate mortgage advisors, under which the Ministry of Justice would become the advisors' regulator, is still in the legislative stages, meaning no authority is currently intervening in the exorbitant fees occasionally charged by advisors to end clients. When advisors are asked to justify the festivities, they point to the insurance agent sector, where companies pay commissions to agents alongside benefits and promotions.
This comparison only highlights the distortion: while in the insurance industry the client does not pay for the advice—even though it is a flawed, opaque model costing the public billions and remaining politically deadlocked due to agents' clout—mortgage advisors charge tens of thousands of shekels directly from clients for what is supposed to be impartial assistance, while simultaneously pocketing a hefty cut behind their backs.
The Capital Market Authority stated: "The draft was published for public comments, which are being reviewed toward the finalization of the instructions as customary."
Mimi Yashir stated: "This is competition open to all mortgage advisors, as part of normal course of business customary in the industry. Furthermore, the company strictly adheres to applicable laws."
LoanWise stated: "The company operates and will continue to operate in accordance with all laws, regulations, and procedures, and has not deviated from legal marketing practices for many years. Should a regulatory body ban this practice, LoanWise will comply with the law."
