The Commonwealth Government is delivering on its commitment to improve the way that unclaimed money in banking accounts and life insurance policies is managed.
The Government will amend the Banking Act 1959 and the Life Insurance Act 1995 to restore the time bank accounts and life insurance policies can be inactive before they are transferred to the government from three years to seven years.
Children’s bank accounts will also be exempt to ensure funds put aside in these accounts will never be transferred to the Government. This recognises that many people choose to put money aside for their children’s future.
In 2012, when Bill Shorten was Minister for Financial Services, the previous government reduced the period of time that inactive bank accounts were declared unclaimed from seven years to three years.
As a result, millions of dollars held in thousands of active Australian savings accounts were transferred to the Government.
This caused real financial distress for many Australians, including older Australians and community groups, who were not able to access their own funds when they needed them.
In 2011-12 around $70 million was transferred to ASIC as unclaimed money. In 2012-13, after the former government’s change, 156,000 accounts worth around $550 million were transferred to ASIC.
The former governments change imposed large costs and inconvenience on those Australians that had to go through the time-consuming process of reclaiming their money. In some cases this took 6 months.
The Government will also make changes to protect the privacy of individuals that do have genuinely inactive accounts transferred to ASIC to address concerns around identity theft and to stop unscrupulous people from preying on vulnerable Australians.
ASIC is currently required to publish an online Unclaimed Money Gazette with detailed personal information. The information published includes people’s name, last known address and the amount of money unclaimed. The Information Commissioner has raised concerns about the potential for identity theft using currently published information.
Some unscrupulous businesses are also using this information to charge fees as high as 25 per cent to reunite people with their own money.
We will remove the requirement for ASIC to publish the Unclaimed Money Gazette and restrict FOI requests generally to an individual’s own details.
There is currently around $700 million in lost bank accounts and life insurance policies.
Australians can access information about unclaimed accounts, free of charge, through the ASIC MoneySmart website at www.moneysmart.gov.au
These changes will provide greater certainty and fairness for Australians in the management of unclaimed monies, and will also cut red tape, saving businesses and individuals $36 million per year in compliance costs.
The change will apply to the next unclaimed money deeming date of 31 December 2015.
18 March 2015