The federal government will introduce amendments to restore the previous threshold for unclaimed bank accounts and life insurance policies, in a move praised by the FSC.
In a joint statement, Prime Minister Tony Abbott and Assistant Treasurer Josh Frydenberg announced intended changes to the Life Insurance Act 1995 and Banking Act 1959 to restore the time bank accounts and life policies can be inactive before transferred to the government from three to seven years.
“In 2011/2012 around $70 million was transferred to ASIC as unclaimed money,” the statement said.
“In 2012/2013, after the former government’s change, 156,000 accounts worth around $550 million were transferred to ASIC.
“The former government's 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 six months.”
The Financial Services Council issued a statement welcoming the move, with CEO Sally Loane saying the change will save many Australians the “unnecessary time and hassle in reclaiming their money”.
“Under the three-year rule there was no nexus between reuniting people with unclaimed monies and the significant costs and administrative burden that were imposed on the industry,” Ms Loane said.
“The decision to revert to seven years is backed by David Murray’s Financial System Inquiry, which found this would halve the number of claims.”
The new FSC chief said the government should be encouraging Australians to access and retain life insurance.