Government gives back your money

Abbott Government to reverse legislation moving ‘inactive’ account balances to ASIC.

Government gives back your money

An announcement is expected today on a reversal of previous Labor Government policy to deem bank accounts and life insurance policies ‘inactive’ after three years of nil transactions.

The so-called ‘three-year’ rule meant the account balances would be transferred to the Australian Securities and Investments Commission (ASIC) if the account had not been accessed for three years. This was changed, from the previous period of seven years, by the Labor Government in 2013. The move will cost the Abbott Government about $550 million. Mr. Abbott has stated that:

“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.”

The monies held by ASIC could, of course, be claimed back by the account holders, but it is claimed that this has been a time consuming business. Children’s accounts are to be exempt under the new legislation.

Those who believe they may have had monies reclaimed by the government under the three-year rule can search for their funds here.

Opinion: At last some good news?

Finally we have a legislative initiative that gives rather than takes. But whilst the intent sounds noble, the result may just be more money for the banks.

When the then Labor Government introduced this legislation in May 2013, we described it as a dumb regulation and we remain of the same opinion. In essence, it was penny-pinching for no real gain. The amount the government gained was, at most, $600 million, but the inconvenience caused to thousands of Australians with low balance accounts was massive.

The interesting point, however, is that those who will now be able to maintain inactive accounts for four, five or more years will probably seriously erode their own savings by continuing to pay bank fees on their balances. At least when the money was transferred to ASIC, as annoying as it was to retrieve it, the over-the-top fees were on hold, so your balance remained fairly stable. And given our record low interest rates, savers have not been penalised by a lack of earnings. Strangely, the main winners from this reversal of Labor legislation would seem to be the big banks.

What do you think? Is it better to have inactive accounts called in and held in the relatively ‘safe’ ASIC environment? Or should they be allowed to lie dormant for twice as long, while being slugged with bank fees? Can you suggest a third, more equitable, way for the government to deal with inactive accounts?





    COMMENTS

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    particolor
    18th Mar 2015
    10:22am
    Thanks for Nothing !! :-(
    wally
    20th Mar 2015
    8:18am
    Jeeze, parti. I though you had squillions put away in long forgotten bank accounts. The ones that Swan and Gillard were eyeing off when they were planning to help themselves. Maybe you should have a little look around to see if you can find where your hoard of forgotten "lost" loot might be hiding! You might heave a sigh of relief, at least. :) !
    Judy in the hills
    18th Mar 2015
    10:37am
    Well I think you say "thank you" to a sensible Liberal Government rather than the "how dare you" to the thankfully departed Labor Government. What a disgusting decision the original one was!!!!
    particolor
    18th Mar 2015
    10:45am
    Originals are always better than Copies !! :-)
    Adrianus
    18th Mar 2015
    1:30pm
    Judy, it's just another example of the mess this government has had to fix.
    Anonymous
    18th Mar 2015
    4:10pm
    Judy in the hills

    Nothing sensible about THIS govt I'm afraid, they are eroding the very essence of Australia's FUTURE and its current economy. Effectively, under the previous govt Australia had the BEST economy in the world (beating China, Russia, EU, UK, USA, etc) and one of the MOST EGALITARIAN (wealth spread out) in the world. Australia's economy is up the creek now because the current Liberal govt has sold us out to BIG business (MOSTLY FOREIGN), by implementing megacorp WISHLISTS as their party's policies for Australia… no knowledge whatsoever of the outcome on current or future economy of Australia.

    Effectively, this government should be brought up on charges of GROSS mismanagement and malfeasance… they are criminal and are simply raping and pillaging Australia.

    Now, to the topic, the original concept of pulling savings that are inactive from the BANKS (ALL the big 4 banks are 43-49% owned by the SAME foreign banks which makes them no longer Australian because they are controlled by huge foreign interests). These same banks make close to a BILLION from eroding these same accounts so that you get nothing if you continued to leave them there.

    The previous Labor Govt. was trying to protect the people's savings from the marauding greed of the BANKS, for this Murdoch and his (foreign) megacorp cohorts decided to tell everyone that their money was being stolen by the govt. PROPAGANDA works, look at your own comments, reflecting EXACTLY what the greedy BANKS want you to believe.

    The disgusting decision is the one that is occurring now…. THEY ARE NOW GOING TO ALLOW THE BANKS TO STEAL YOUR MONEY. At least the Govt. were only holding it for you WITHOUT CHARGE.

    For goodness sake ….. get a grip, don't watch megacorp television/newspapers who are just feeding you utter rubbish which always leads to MORE money for the wealthy.
    Chris B T
    18th Mar 2015
    10:49am
    Stealing money from accounts not used for 3,4,5,6,7 or how many years IS STILL STEALING.
    They should be left alone or I mean really try to contact the owner of the funds.
    NOT THE TRYIED CONTACTING ONCE, THEIR NOT INTERESTED IN THEIR FUNDS ATTITUDE.
    At worst left with the PLACE OF DEPOSITED FUNDS IN HOLDING ACCOUNT EARNING INTEREST FOR THE RIGHTFULL OWNER.
    NOT THE THEIVING GOVERNMENT.
    Sen.Cit.90
    18th Mar 2015
    12:57pm
    Yes Chris B T, Leave peoples savings alone. I'm 86 yo and have a very modest account in a Bank other than my regular bank. I'ts sole purpose is to assist with my burial if needed. I don't check it often and it is free of bank charges.
    Rob
    18th Mar 2015
    1:02pm
    Not sure you understand the process Chris B T, the individuals money is still there, earning interest and in most cases I would assume people would be better off financially.
    MICK
    18th Mar 2015
    1:16pm
    The real crime is that the rightful owners are not contacted (several times) and told what is going to happen if there are no transactions made. Imagine what a bank would do if YOU owed them money? It would be letter after letter. So what's so different with investor accounts?
    Adrianus
    18th Mar 2015
    4:34pm
    ASIC has the money for a week or two only. What is wrong with ASIC contacting the rightful owner?
    wally
    18th Mar 2015
    10:43pm
    I agree Chris, Julia's brainstorm to scoop up the money people had left in their bank accounts shows how desperate Labor was. Their willingness to try to justify this blatant theft only shows how low Labor was prepared to go. The only thing I wonder about is why it took so long for the current government to rescind Labor's "Raiders of the Lost Accounts" caper.
    Chris B T
    19th Mar 2015
    3:05pm
    I made a comment on what the Government Does with your money.
    It is removed from where you left it, Fee BEARING or Not, Large or Small Interest
    Doesn't really matter, the removal of the money is.
    Has any one mouthing off on this SITE tryed to get their money back it is not that
    easy. When you do get it back ( the comment about CPI and other )
    You receive your money with modest interest like deeming rules.
    While it is invested on the overnight money market or were else they can achcive
    the most interest on your money.
    There not that Helpfull. They treat it as if it was their money.
    Thats why there are shonks for a fee will redeam YOUR MONEY.
    Adrianus
    20th Mar 2015
    9:24am
    How right you are Chris B T!!
    The whole process took me 171 days. The bank wasn't that helpful and ASIC could not have cared less. It caused a political sh@* fight between them, each blaming the other. I made over 25 phone calls and 5 emails to get to the bottom of it. My conclusion is that Labor wanted to get all those dormant union slush funds off the banks and rattle some cages at the same time. What a destructive mob of vandals they were!!
    Adrianus
    20th Mar 2015
    9:28am
    and still are!!!
    Inky Black
    18th Mar 2015
    11:02am
    Leaving aside political comment, I would observe that many "inactive" accounts are left to gather interest for a rainy day. The nature of these accounts means that they do not get charged fees - at least in my experience. And if they gather interest, is that regarded as a transaction for the purposes of the legislation?
    They should be left for an extended length (10 years?) but not forever. People drop off the radar, and so do some of these accounts, and the bank should not be pocketing the untapped funds. It eventually becomes unclaimed monies, and should go to the government if the legitimate owner has not been found after reasonable location efforts by the institution holding the funds.

    Let's stick to commenting on the problem, not which political party is involved.
    Judy in the hills
    18th Mar 2015
    11:07am
    Come on now, it was a political decision by Labor - corrected by the Libs. Why can't we give some credit when its due???????
    KSS
    18th Mar 2015
    12:10pm
    Judy in the hill, because it is not in the nature of this site to credit the current Government with anything even remotely good.
    dougie
    18th Mar 2015
    12:28pm
    Judy in the Hills,
    I support your congrats to the Abbott government. Whilst they might not always achieve that which they aspire to, they do seem to be intent on fixing the mess.
    mangomick
    18th Mar 2015
    12:36pm
    When the Government through ASIC take the money they pay interest on that money held at the current CPI rate for the year. Call me cynical but with the CPI likely to be greater than bank interest one would have to wonder if the Government is being "so generous" to actually save themselves money given that some European Banks, Denmark,Germany,Swiss actually have negative interest rates at present. In effect 3 years or 7 years is really just Mangos or Mangoes .
    Rob
    18th Mar 2015
    12:43pm
    Not sure what your point in mangomick. the issue for me is does the govt hold unclaimed moneys or do we leave it with banks to earn interest on. I'm banks can earn interest higher than they are paying. Personally I couldn't give a toss, if an individual(s) don't manage their accounts who cares.
    Adrianus
    18th Mar 2015
    1:20pm
    I don't know if it was a political move by Labor, but if any of you had bothered to look at the names on those accounts you would see a very large number in the name of Unions or Associations and Superannuation. There has to be another reason why Swan shortened the time frame to 3 years. It caused a lot of angst amongst depositors because Swan gave the banks no time to notify their customers.
    MICK
    18th Mar 2015
    1:24pm
    Tell me that Frank is not at work above using a couple of his aliases!!! Here AGAIN we have the endless spiel suggesting that Frank's employer is good. Yeah right!!!
    You are perfectly correct Inky Black although I suspect that it would be fairer to try and locate family before giving wasteful governments more money to burn.
    mangomick
    18th Mar 2015
    1:47pm
    Rob
    Point I was making (and I know it's a long bow I'm drawing) is that ,when Government takes any money from unused bank accounts that money is earning whatever the CPI rate is so that if you put in a claim to get your money back you will have got back your money plus interest at whatever the CPI rate has been. With bank interest rates being so low at present around the world , Negative in some European Countries, it may have been possible that the CPI rate could be higher than Bank interest so that the Government may be paying out more in interest by paying interest at CPI than the funds would get by sitting in a bank and the Government would have to make up that shortfall. Governments can possibly access finance from overseas banks at a lesser rate than what it would have to pay on those funds if it was going to have to meet a CPI rate that blew out. That's providing those funds are claimed back.Without taking those funds out of accounts those funds now only make lousy bank interests which after 2pm today may only be 2%. So if CPI is running at 3.5% you are better off letting the Government take it out of your account while interest rates are only 2% , let them pay you interest at the CPI rate of 3.5% and then claim it back later when interest rates are higher than CPI. And Frank don't know if it was just Swann. Didn't Japannese, USA and U.K Governments all do the same thing.
    Adrianus
    18th Mar 2015
    1:48pm
    Well mick, you tell me why so many unions would have dormant accounts?
    Rob
    18th Mar 2015
    2:13pm
    Mango... And it is worse if the money is in a fee paying account. I agree with what you have just written regarding interest rates. Two scenarios, Tony et al reacting to bank pressure to leave the accounts with them or secondly the cost argument i.e. people using the cpi as a better interest rate. I think it is more likely the former. Having said that you would need to know the average value of these accounts to see whether it is or is not worth the hassle from an individual point of view of chasing cpi interest. It certainly is for a bank when they can aggregate the funds and place on the shorter market.
    Adrianus
    18th Mar 2015
    2:30pm
    Mango and Rob. I did not see an account above $28,000 when I went looking for my money. Most were below $5,000. I hardly think depositors would adopt that sort of investment strategy. for .5% of $5k say $25pa. There is $2b held by the government and the extra $700m would have come in handy for the government of the day.
    Anonymous
    18th Mar 2015
    4:22pm
    Inky Black

    BLOODY GOOD COMMENT…

    don't worry about the likes Judy in the Hills and KSS and … either UNTHINKING Liberal hacks or INDOCTRINATED by the likes of Murdoch, so they ATTACK anyone that EXTRACTS the LOGIC and leaves politics behind.

    THEY can't have anyone actually making sense, can they!!!
    Adrianus
    18th Mar 2015
    5:12pm
    mango, I think the main reason for the ALP strategy was to catch some depositors off guard. A Russian group had amassed some $20m in a few accounts ASIC now want them to prove how they came by the money.
    mangomick
    18th Mar 2015
    6:22pm
    I was just making a point, and i admit to drawing a long bow , but it was possible that it could actually save the Abbott government money if those funds were left where they are and the government borrowed the capital at a cheaper interest rate rather than "reclaiming" the accounts and possibly having to find interest to the tune of the CPI rate. I was being strictly hypothetical, just putting forward a scenario to consider as to why Abbott's Government would revoke the legislation. I might add that It wasn't just the Labor party who stooped to these means to rape and pillage bank accounts that were inactive. I think Japan,USA and U.K all did the same. it is an easy and very cheap capital source for Governments when interest rates are above the CPI rate. Don't know about ALP strategy Frank, the 7 year rule was already in place and would have allowed any government to capture those inactive accounts eventually.
    Adrianus
    18th Mar 2015
    8:27pm
    By ALP strategy, I mean introduce the change to 3 years in a rush and give the banks a short timeline leaving them no time to notify depositors. The 7 year rule has been in for 80 years or so. Who would have believed somebody could change it overnight?
    wally
    18th Mar 2015
    10:48pm
    Hi Musso. I see you have left your caps lock on again. Do you leave your turn signal on when you go driving down the street, too?
    Rob
    18th Mar 2015
    11:22pm
    Good comment Wally. Not sure musso would understand.
    Anonymous
    20th Mar 2015
    12:35am
    wally and Rob

    Dear me, energy to bluster and say nothing so late at night… well done.
    particolor
    20th Mar 2015
    7:07am
    Late Night Cyclonic Depression I suspect ! :-)
    wally
    20th Mar 2015
    8:21am
    No parti. It's just late night depression.
    KSS
    18th Mar 2015
    12:31pm
    Restoring 'lost' accounts to the rightful owners - the account holder - is a good move. There was a massive hue and cry when the Labor Government changed the rules and sent the money to ASIC including anecdotal evidence on this very site where people had a job getting it back. And we all were expected to be critical of the legislation and sympathetic to the account holder muttering 'its not right/fair/not their money/blah/blah...'.

    So surely the reversal of the legislation is a good thing? But no! Now we have to get all upset for those people who continue to hold money in accounts that attract fees. Well I don't care if they do. If people can't be bothered to spend a little time seeking a fee free account - and there are many - then they shut up and pay the fees. Your money, your choice of account, your responsibility.
    Rob
    18th Mar 2015
    12:54pm
    Agree their responsibility to manage their own accounts. But I wonder why the government or banks need to bother chasing up inactive accounts? Personally I prefer the idea of the taxpayer having access to the funding from these accounts than the banks.
    KSS
    18th Mar 2015
    1:07pm
    Agree Rob. Do people really have so little regard for their money. I cannot imagine ever having an account I 'forget'. I obviously need the money :-)
    Adrianus
    18th Mar 2015
    2:39pm
    KSS, I can see you are all fired up about this but not sure I understand why? In my case I was far too busy to know of the rule change. In those days I had no time to do what I'm doing right now. When I finally got around to doing something about the account the bank told me I was a week too late. During the same conversation I learned about the rule change. Not everyone was a follower of what the labor party was doing. It all became too much for most people. They were a disaster.
    KSS
    18th Mar 2015
    6:05pm
    Not fired up about the issue Frank. It didn't/doesn't affect me. I know where my accounts are! Just fed up of the constant whinging about this current Government even when they are trying to do the right thing. All the whining that went on when the last Government sent the accounts to ASIC and now complaining still when the current Government sends them back.

    But either way, people are responsible for their own accounts. This constant outsourcing of personal responsibility to others is really annoying.
    Adrianus
    18th Mar 2015
    8:31pm
    I agree. Nobody wants to accept responsibility for their own actions anymore.
    Adrianus
    18th Mar 2015
    1:24pm
    "Strangely, the main winners from this reversal of Labor legislation would seem to be the big banks."

    I suppose big banks and little banks will save on the needless cost of doing something every 7 years that they don't need to do every 3 years. Maybe you could call that a win.
    Rob
    18th Mar 2015
    1:31pm
    They also have access to a considerable amount of funding that they can lend out at higher rates.
    Adrianus
    18th Mar 2015
    1:46pm
    I don't understand why it would be important to slow down bank lending, or to have banks less profitable. However the previous government did have a different methodology.
    Rob
    18th Mar 2015
    2:14pm
    methodology or philosophy?
    Adrianus
    18th Mar 2015
    2:48pm
    You may be correct Rob. Swan gave the impression he had a deep and lasting hatred for banks.
    Patriot
    18th Mar 2015
    5:06pm
    In that case, I might have underestimated him (Wayne Swan) and he COULD be a "Man after my own heart".
    Adrianus
    18th Mar 2015
    5:16pm
    Yes, Patriot and Swan new leaders of the Australian League of Nations.
    Grateful
    18th Mar 2015
    3:10pm
    Kaye. Of course it will be all good news for the banks. They will be able to continue to incur their account charges PLUS they will continue to be able to use those funds to lend out. They pay virtually Nil interest, so, that $330 million that was taken out since 2013, will be able to earn the banks anything from 4.9% for mortgages to over 9% for personal loans and COSTING them Nil. Compare that to having to borrow that money which other lenders have to do.
    Not wanting to be cynical, but, I can only think that being a Liberal government, that the intention would be to keep sweet with the almighty banks and nothing to do with the benefits of the depositors involved. Might be a pay off for some "bank related" changes that will be in the May Budget i.e. dare I say it, a super tax on obscene bank profits, limits to bank executives' remuneration packages and, one can never stop hoping, placing restrictions on negatively geared real estate, an absolute boom for current bank profits!!!
    Imagine, the banks are making huge profits from negatively geared loans for which the government (the taxpayer) is directly subsidizing???
    Patriot
    18th Mar 2015
    3:20pm
    Grateful
    They DO NOT need these funds to make loans.
    Their usual practice is to create money "Out of Nothing".
    The rest is Pure & Unadulterated PROFIT!!!!
    Grateful
    18th Mar 2015
    4:05pm
    Patriot. 56% of the funds that CBA uses for their mortgage lending is from their own savers' money, most of it earning virtually Nil interest. i.e. money that COSTS the CBA Nil!!
    Let's say, 5% profit on that $300 million that they "took away" since 2013, would pay most the BASE salaries of all of the 4 CEO's. Nuff said??
    Patriot
    18th Mar 2015
    5:04pm
    Grateful,
    Download the booklet at the following link.
    This sets out perfectly "How it is done" rather than what THEY are leading us to believe.
    https://archive.org/details/TheMoneyTrick
    Adrianus
    18th Mar 2015
    5:06pm
    Yes Grateful it is coincidental that soon after the banks went aggressive on deposits, buying at high rates, the Labor government robbed the banks and the RBA. Many people I spoke to had not seen this before and worried that the ALP were priming us for a communist takeover.
    Adrianus
    18th Mar 2015
    5:19pm
    Thanks to the USA government though. I think they propped up the NAB and WBC to the tune of a few $b. What a disaster that ALP government was. I hope we don't see them back!!
    Rob
    18th Mar 2015
    6:02pm
    Couldn't agree more Frank
    Anonymous
    20th Mar 2015
    12:52am
    Frank & Rob

    Are you sure you aren't joined at the hip you two… whatever Frank spews forth, Rob is there to compliment. Can you try and do that with less sucking noises Rob, you're stopping me from sleeping.

    Frank
    Thank the USA, oh! please…. what a lot of tommy rot, old SEPO son. The USA does NOTHING unless it can screw something free for themselves AND they certainly DID NOT save any Australian BANK. Australian banks were that secure that the USA banks bought shares in OUR banks BIG TIME!!!!

    The Labor party stepped in before any form of non-confidence appeared and gave investors a govt guarantee that protected them up to $1m and some other big time protection for Wholesale banking. That has now reduced to $250,000 each person at each covered Aust. Bank.

    The ALP should be given credit where it when it is DUE….. they moved fast during the first BIG stage of the GFC and developed REAL policies and strategies to manage Australia.
    The RESULT: One of the LOWEST DEBTS in the world; BEST ECONOMY in the WORLD; one of the MOST EGALITARIAN country in the world; BEST NBN in the world that was going to cost ONLY $37billion (AUDITED) - current cost of the utter rubbish that the LIBs are putting in is $160billion after paying Telstra for their ANCIENT and USELESS COPPER for five years (but NOT taking into account the two extra power stations required to put electricity to the Nodes they have to use).

    Now have a look at the fiasco of GROSS MISMANAGEMENT and INCREASED DEBT and CIRCUS of international IDIOSY purveyed by the FOOL who things that TAKING UP MEGACORP wish lists AS POLICIES is a good thing. In order for our economy to look even a little bit steady, the FOOL is simply SELLING OFF AUSTRALIA to FOREIGN investors.

    As a SEPO Frank, you, of course, wouldn't give a damn!!
    wally
    20th Mar 2015
    8:36am
    Change the record about how much Australia owes Kevin 07. Tell that to your grandchildren when they realise that they (and their kids) are going to be footing the bills Rudd ran up "saving" Australia with this taxpayer funded generosity. They should be as thrilled as you seem to be about the influx of boat people Rudd encouraged to gate crash their way into Australia and remain a drain on the unemployment benefits since their arrival. Or maybe all the fly by night home insulation rip off merchants that rorted the taxpayer and fled back under their rocks when (after four young installers died) Rudd finally woke up and scrapped that program like he scrapped the solar panel scheme.
    So you think Abbott is a fool that is mismanaging the Australian economy? I disagree with you there, but if you are at all fair minded, you will admit that the if this is so, he is following the EXAMPLE set by Kevin 07. Especially when you consider that Australia's indebtedness to China to finance Rudd's dreams amounts to SELLING OFF AUSTRALIA TO FOREIGN CREDITORS1
    Adrianus
    21st Mar 2015
    11:26am
    Mussitate you are showing complete ignorance. Rudd stupidly and unnecessarily upped the bank guarantee which sent a strong message to investors that something bad was going to happen.
    This caused a run on mortgage funds, which is the staple income producer for retirees. These funds could not cope and had to suspend withdrawals until properties were sold in a flat market. Many investors not only lost their income but could not do anything about it for a year or 2. This did not need to happen and you stupidly think Rudd, Bowen, Swan, Gillard and Shorten should get some sort of credit for their stupidity? Try thinking without being bias to your labor mates.
    Margins were reduced as banks offered higher than usual rates to potential depositors. Of course Swan never let up with his sharp tongue and didn't miss an opportunity to put the boot in. At least 2 banks, NAB and WBC borrowed $b's from the US Federal Reserve. Why? well someone had already cleaned out the RBA reserve fund. Guess who? Your good mate Swanny!
    If you want to give these incompetents credit for doing a good job then you really need to stop reading the propaganda.
    Rob
    18th Mar 2015
    3:43pm
    On a side issue is anyone aware of the tax rules with prepaying private health insurance. Are you able to claim in the same year the rebate for the current year and the prepaid year. Ie two rebates in the one tax year?
    KSS
    18th Mar 2015
    6:09pm
    Check the ATO website?
    Rob
    18th Mar 2015
    11:23pm
    Doesn't help
    Adrianus
    19th Mar 2015
    9:45am
    Cant see why you couldn't do that Rob, but check with a tax agent.
    Radish
    19th Mar 2015
    2:13pm
    If you are able to pay a year in advance before the 1st April you will be charged this year's rate so I understand.
    Abby
    20th Mar 2015
    7:48pm
    This link may be of assistance
    http://www.privatehealth.gov.au/healthinsurance/incentivessurcharges/insurancerebate.htm
    Chris B T
    21st Mar 2015
    10:41am
    The other part about removing your funds from where you had it, after a short period of time it is transferred to Internal Revenue lost forever not even a Tax Credit at a Later Date.
    Thats the reason for the Removal OF YOUR FUNDS ( Nice work for any Government )
    particolor
    23rd Mar 2015
    7:01pm
    I'm starting a New Bank Where I move YOUR Funds to a NEW ACCOUNT every 30 Months !! :-) There that'll fix them !! :-)
    geomac
    23rd Mar 2015
    3:42pm
    “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.”
    Many Australians ? Another win for the banks by this govt.


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