Karen McNamara (Dobell, Liberal Party) Share this | Hansard source

I rise to support the Banking Laws Amendment (Unclaimed Money) Bill 2015. This bill provides effect to measures announced in the 2015-16 budget as amendments proposed to the Banking Act 1959 and the Life Insurance Act 1995. These amendments refer to the unclaimed money aspect of these acts. The primary feature of this bill is for the extension of the period of inactivity required before moneys held in accounts with an authorised deposit-taking institution or life insurance provider can be transferred to the Australian Securities and Investments Commission.

From 31 December 2015 this bill will provide that funds from Australian bank accounts and life insurance policies can be transferred to ASIC only after they have been inactive for at least seven years. In late 2012 the previous government reduced the required period of inactivity to three years. In opposition this government did not support this change at the time, and as promised we are now seeking to make this right. This is why in the 2015-16 budget we committed to reforming the unclaimed moneys provisions. This bill will restore the period of inactivity back to seven years.

This bill also exempts accounts being transferred to ASIC where the account holder provides advice that the account is to be treated as active. This will occur after the account is assessed as unclaimed money at the end of the year but before it is transferred to the Commonwealth. Previously there had been little time between accounts being recognised as inactive and the funds being subsequently transferred to the Commonwealth.

The provisions for unclaimed moneys to be transferred to the Commonwealth have been in place in Australia since 1911. Initially these provisions were to stop forgotten savings and life insurance policies from being eroded by fees and charges. Regardless, the unclaimed money is always claimable by the rightful owner. There is no time limit within which a rightful owner must make a claim. The money remains available to claim even though it has been transferred to the Commonwealth Consolidated Revenue Fund. After an account has been inactive for seven years the funds in the account will be transferred to the Commonwealth where they will grow tax free at the rate of the consumer price index.

As already noted, in 2012 the previous Labor government reduced the required period of inactivity to three years from its previous timeframe of seven years. This resulted in half a billion dollars from thousands of accounts being transferred to the Commonwealth. In many cases, the owners of accounts affected under the amendment to three years were aware of these accounts but believed the period of inactivity to be seven years. This placed a high number of Australians under financial distress at being required to reclaim money, especially the elderly—you can imagine the distress this caused them. For many this meant delays in purchasing new goods, such as a new washing machine, a new car or even having that hard-earned holiday. For some the consequences of not being able to access their savings when they needed their money were severe, particularly in regional areas where some found themselves financially in dire straits. There are even reports of some people having to sell their homes.

Returning the required period of inactivity before savings and life insurance policies can be transferred to ASIC to seven years is expected to reduce the number of effectively active accounts transferred to ASIC every year by up to 50 per cent. It is forecast that this change will cost the government $285 million over four years. However, the saving benefit to the community, and the reduction of red tape associated with accounts being transferred from and then returned to the account holders, is estimated to be $36 million each year. This is another example of how serious the Abbott coalition government is when it comes to reducing red tape for Australian consumers and businesses. With the changes in this bill taking effect on 31 December 2015 no account should be assessed as unclaimed until at least 2019 and no account funds should be transferred to the Commonwealth until at least 2020.

This bill also creates an exemption for those accounts that are created for children and, in addition, accounts held in a foreign currency. The exemption of children's accounts in this bill comes from the Australian tradition of being able to provide for your children when they need it most. Many Australians set aside money for their children's future. They trust that this money will continue to grow in value. They also hope that this money will be available to their children when, for example, they turn 18. This legislation acknowledges those Australians who are working hard to contribute to their family's future by ensuring money in children's accounts will not be transferred to the Commonwealth.

The exemption of foreign currency accounts is a further step in improving the legislation on unclaimed moneys. These types of accounts are utilised by sophisticated consumers in complex international business transactions. The transferring of these accounts to the Commonwealth can not only disrupt different types of international business processes but also result in the account holder being subjected to a financial loss. The funds being transferred to the Commonwealth would see them return to Australian dollars, which may result in a negative financial position for the account holder. Australian businesses competing in the global market deserve all the assistance they can get, and the exemption of foreign currency accounts from unclaimed money provisions is one way this government is helping Australian businesses.

Another key component of this bill is the protection of the privacy of individual accounts that have unclaimed moneys. The requirement for the Australian Securities and Investments Commission to publish details of the account has been removed. The cancelling of ASIC's unclaimed moneys gazette will not make it more difficult for account holders to reclaim their funds. ASIC's primary online resource for Australians who are looking to reclaim money will remain freely available to all Australians with the website moneysmart.gov.au. The cancellation of this publication will help protect Australians with unclaimed accounts from exploitation. In addition, to protect those Australians with unclaimed moneys from exploitation this bill introduces a secrecy provision to ensure that only individuals with unclaimed accounts, or those acting on their behalf, are able to access their data via the Commonwealth Freedom of Information Act 1982.

In response to continual freedom of information requests, ASIC is required to publish a database on their website containing detailed personal information of each Australian with an unclaimed account. Names, last known addresses and the actual amount of unclaimed moneys are amongst the details published. The Australian Information Commissioner has raised concerns that the level of the information currently published online could enable identity theft. The concerns around identity theft are one thing; however, the depth of the details published have led to unscrupulous individuals and businesses using this information to charge fees as high as 25 per cent to reunite people with their own money. The government and financial institutions do not charge account holders for this service.

The provisions in this bill allow the government to combat problems associated with disclosing the identity of those with unclaimed money and deter particular businesses exploiting those seeking to reclaim their money. Such steps include restricting FOI requests—generally to an individual's own details—and the cancelling of the published unclaimed moneys gazette.

The extension of the time frame for unclaimed accounts from three to seven years is designed to assist a number of Australians. In helping Australians in this manner, the reforms in this bill also include methods to make it easier to keep accounts active. This bill ensures that if consumers indicate to their bank in any way that they are aware of the account before it is transferred to ASIC, it will remain in their control. Ensuring you are aware of an account can be as simple as checking the balance online or over the phone. As a result of these reforms, thousands of Australians will no longer need to search and apply to their bank or life insurance provider for the return of their savings. Similarly, banks and life insurers will no longer need to unnecessarily transfer millions of dollars of Australians' savings to the Commonwealth.

In undertaking such transfers, the banks and life insurers have also had to respond to thousands of requests for the funds to be returned. Quite often this was done in the same year the funds were initially transferred. With wide stakeholder consultation having taken place, this bill represents community expectations in regards to unclaimed moneys. As a result of these reforms, thousands of Australians will no longer need to locate their missing savings and apply to their financial institution or life insurance provider for their return. Likewise, financial institutions and life insurers will no longer be required to transfer unnecessarily millions of dollars of Australian savings to the Commonwealth, only to find that they then have to process requests for this money to be returned and, in many instances, within a short period that the funds were transferred in the first place.

This bill ensures the government is dealing with unclaimed money in the most effective way. As mentioned previously, this bill delivers on the government's promise to reform unclaimed moneys provisions and contribute to the government's commitment to reduce red tape. This bill provides for more Australians to have control over their personal finances, better protection of personal information and provide a safety net to protect those who have genuinely forgotten amounts in their bank accounts from having the value eroded from fees and charges.

I commend the bill to the House.

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