Have you ever left money sitting in a bank account for more than three years? If so, watch out. According to media reports, the government has seized a record $360 million from 80,000 idle bank accounts in the year to May.
This is more than the total amount collected from idle accounts in the previous five decades combined. That’s right — between 1959 and 2012, about $330 million was seized. Why the dramatic increase?
The answer lies in a simple rule change implemented by the former government. It lowered the threshold at which idle funds could be seized by government from seven years to three years. The move was designed to raise over $100 million and criticized by the banking sector as a blatant cash grab.
To get your money back you’ll have to prove your identity and your bank can reclaim the funds from ASIC. The rationale for the three-year rule is to prevent bank fees from eroding inactive accounts.
Property accounts, long-term savings accounts and trusts are all subject to the new three-year rule. Chief executive of the Australian Bankers’ Association, Steven Munchenberg, told Dynamic Business that there were “all sorts” of accounts that might not be touched for three years.
“Most likely they are savings or transactions account where a customer may have put money aside for a rainy day, savings for a purpose such as a holiday or for something like medical expenses,” he said.
“We can’t comment on why an account may be idle, in some cases they may have been forgotten or, as we have previously stated, the money has been put aside for use in the future. There is a process for customers to apply to ASIC to reclaim money, however, you need to speak to ASIC about the process.”
The current three-year threshold is being reviewed with Treasurer Joe Hockey saying the government was aware of the concerns around the rule change.
However, consumer group Choice has warned the new rule is a wake-up call for people not to leave their funds unattended for more than three years.