Settlement approvalClass action

Class Action 28695-05-16 Shefagat: Mizrahi Tefahot will pay NIS 17,855,040 over small business classification

The court approved a settlement in a class action alleging that the bank classified corporations entitled to "small business" status as a "large business" and overcharged them fees. Under the agreement, the bank will pay NIS 17,855,040 for the period through the end of 2024, without admission.

This article is based on Mizrahi Tefahot Bank's immediate report of April 23, 2026, in its English version. The case number and the amount do not appear in the report. They are taken from the settlement agreement filed for approval on November 13, 2025, as described in the full article on the settlement.

Background: Mizrahi Tefahot classifying corporations as a "large business"

Class Action 28695-05-16 was filed in May 2016 by Shefagat Ltd. in the Tel Aviv-Jaffa District Court. Under the Banking (Customer Service) (Fees) Rules, 5768-2008, a corporation whose annual turnover does not exceed NIS 5 million is entitled, subject to exceptions, to the "small business" fee schedule. Any other corporation pays according to the large business fee schedule.

The parties' arguments

The applicant argued that corporations that gave the bank a financial statement with a turnover below the ceiling remained classified as a "large business" and paid higher fees. The bank denied this. According to the bank, it acted lawfully, informed its customers, and the responsibility for requesting a change of classification lies with the customer.

What the court held: approval of the settlement

According to the bank's report, on April 23, 2026 the Tel Aviv-Jaffa District Court gave a judgment approving the settlement. The report does not set out the terms of the settlement as approved.

Under the agreement filed for approval, the bank will pay NIS 17,855,040 for the period through the end of 2024. The sum is calculated at NIS 960 for each year in which an eligible corporation was classified as a "large business", based on an EY review of the years 2013 to 2023 and the bank's review of 2024. For the years 2025 and 2026 additional payments were set, which the mediator estimated at about NIS 5.4 million.

The agreement was reached in mediation before Prof. Sharon Hannes, and it states that it contains no admission by any party. The bank also undertook to classify accounts according to the financial statement provided to it, and to notify customers classified as a "large business" of their right to request a different classification.

Who is eligible and what to do

Under the agreement, eligibility is determined according to a list prepared by the EY firm, based on financial statements that corporations provided to the bank. There is no need to submit a request. The credit is supposed to be made to the corporation's account and to appear in the account statements with the description "ת"צ 28695-05-16" (Class Action 28695-05-16).

The payment date is derived from the approval of the agreement in a final judgment. A corporation that has no active account is supposed to be sent a cheque. Full details of the payment mechanism appear in the article on the settlement.

What it means for Mizrahi Tefahot customers

The approval of the settlement is not a finding that the bank overcharged fees. Under the agreement filed for approval, the settlement obliges the bank to pay and to change the way it classifies business customers who provided a financial statement. The report on the approval does not set out the terms that were approved.

A company whose turnover does not exceed NIS 5 million can check in its personal online area the classification of the account and whether a credit was received. The proceeding also reached the Supreme Court, in Leave to Appeal (Civil) 8674/19.

Sources

Frequently asked questions about court rulings against Mizrahi Tefahot Bank

Was the settlement in Class Action 28695-05-16 approved?

Yes. According to Mizrahi Tefahot's immediate report, the Tel Aviv-Jaffa District Court approved the settlement in a judgment on April 23, 2026.

How much will Mizrahi Tefahot pay?

According to the settlement agreement filed for approval on November 13, 2025, NIS 17,855,040 for the period through the end of 2024, and additional payments for 2025 and 2026 that the mediator estimated at about NIS 5.4 million.

Does a corporation need to submit a request to receive a credit?

Under the agreement, no. The credit is made to the eligible corporation's account and will appear in the account statements with the description "ת"צ 28695-05-16" (Class Action 28695-05-16).

Who is considered a "small business" for fee purposes?

Under the Banking (Customer Service) (Fees) Rules, 5768-2008, and subject to exceptions, a corporation whose annual turnover does not exceed NIS 5 million.

Case number and amount according to the settlement agreement filed for approval on November 13, 2025; the bank's report on the approval does not state them

How to cite

Class Action 28695-05-16 (Shefagat Ltd. v. Mizrahi Tefahot Bank), Tel Aviv-Jaffa District Court, 23.04.2026. Source: Net HaMishpat (Israeli courts database), case Class Action 28695-05-16 (Shefagat Ltd. v. Mizrahi Tefahot Bank).

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