The Australian Bankers’ Association (ABA) says it welcomes the government’s commitment to making big changes to its unclaimed money legislation, but says it feels the legislation was unnecessarily rushed.
Steven Münchenberg, chief executive of the ABA, says the government has consistently argued that the Unclaimed Money and Other Measures Bill 2012 is for the benefit of consumers.
“We support any reasonable measures to reunite customers with money they may hold in bank accounts, but this policy argument does not explain why this Bill has been pushed through with such haste.”
Parliamentary secretary to the treasurer, Bernie Ripoll MP, says the reforms will help reunite people with their unclaimed money sooner and protect the real value of that money while it remains unclaimed.
“Under the reforms, lost super and bank accounts will stop being eroded by fees and inflation, be paid interest and reunited with their owners sooner. The reforms will ensure this lost money is properly protected so people can get what is rightfully theirs.”
For example, Ripoll says that under the current rules, a 20 year old with $1,000 in super can unknowingly have their super savings eroded to just $418 after five years by a range of fees and deductions.
“As a result of the government reforms, the same 20 year old will be able to claim $1,131 from the Australian Tax Office after five years, a boost to their superannuation savings of over $700 compared with current arrangements.”
Improvements to the legislation will be made through regulation in order to address some of the concerns raised by the banking industry, including confirming that term deposits, linked and offset accounts, children’s accounts, and accounts for other specified purposes, are to be excluded.
Münchenberg says these clarifications and changes are intended to protect bank customers who want to operate accounts on a ‘set-and-forget’ basis and maximise their savings.
“These customers do not want this choice taken away or discover that their money has been removed by the government. We appreciate that the government has recognised these concerns.”
The ABA is pleased with the extension of time for implementation, but says that banks will still need to run a dedicated process on behalf of the government, rather than just the normal annual process, which, Münchenberg says, can be costly and disruptive – particularly for smaller banks.
They welcome the move by the coalition to amend the legislation to allow proper consideration of its impacts and a reasonable period for implementation.
Münchenberg says that if the policy intent of the legislation is to assist customers, proper consideration should have been allowed to ensure it achieved that result, with minimal risk to customers and cost to banks.