Banks warn Government set to take inactive accounts

[MrBurns]

Be warned -

Hundreds of millions of dollars in inactive bank deposits are likely to flow to the Federal Government from May.

Legislation amended late last year means any account that has not seen activity within three years can be transferred into the Commonwealth's hands - previously the rule was seven years.

The money will be able to be reclaimed from the Government through the Australian Securities and Investments Commission (ASIC).

The new law comes into effect at the end of May and banks are advising customers to make transactions as small as a dollar to ensure they are not transferred to ASIC.

Australian Bankers Association chief executive Steven Munchenburg says many accounts will be affected.

"If you've put some money away to save for the future and you're not adding any more deposits to that, and if you've got trust accounts where money is being held for some reason in the future, if you've got bond money for example where you're a landlord and the tenant's bond money is sitting in an account for more than three years, any of those sorts of those accounts, and the banks are obliged to move the money to the Government," he said.

The banking industry believes the Government's changes to inactive bank accounts legislation is just revenue raising.

Mr Munchenburg says the legislation was rushed through at the end of last year.

"A lot of suspicion at the time that the Government is rushing this through because they were more concerned about their own financial bottom line than they were about reuniting consumers with their accounts," he said.

"It was never clear to us why it had to be rushed through if it was only focused on reuniting consumers with accounts."

Mr Munchenburg says three years seems an arbitrary time limit as the Government failed to consult the industry on the change.

"I don't know why three years has been chosen over seven," he said.

"Certainly, if the Government believed that seven years was too long, we would have expected them to talk to us about what is an appropriate timeline or how to deal with accounts where people have deliberately left them alone, and then we'd avoid some of the problems that we are concerned will affect customers."

http://www.abc.net.au/news/2013-02-...rs-government-set-to-take-their-money/4541116

 

[pixel]

Of course it's a money grab! The Swayne needs cash to get at least close to Budget Surplus.

If the banks are so concerned about their customers' welfare, shouldn't it be easy enough for them to send out a letter after two years or 30 months, asking the account holder to either inject or withdraw a Dollar? They'd run the same query a few months BEFORE they run one for the Gov'mint, showing all accounts that have been untouched for 30 months instead of 36. And then they stick the result into a mailmerge that spits out letters to the account holders rather than cheques to Canberra.

Problem solved.

 

[MrBurns]

Of course it's a money grab! The Swayne needs cash to get at least close to Budget Surplus.

If the banks are so concerned about their customers' welfare, shouldn't it be easy enough for them to send out a letter after two years or 30 months, asking the account holder to either inject or withdraw a Dollar? They'd run the same query a few months BEFORE they run one for the Gov'mint, showing all accounts that have been untouched for 30 months instead of 36. And then they stick the result into a mailmerge that spits out letters to the account holders rather than cheques to Canberra.

Problem solved.

Good idea............3 years is too short, this will cause headaches everywhere, where's grandmas money gone ? etc.

 

[Julia]

Of course it's a money grab! The Swayne needs cash to get at least close to Budget Surplus.

And that's entirely what it's about. This sort of slimy behaviour will just further dig Labor into their own burial.

 

[gav]

And that's entirely what it's about. This sort of slimy behaviour will just further dig Labor into their own burial.

I wish I could agree. But most people won't even hear about it, they'll too busy watching My Kitchen Rules or some other rubbish.

 

[FlyingFox]

Thanks for the info. I had heard something along the lines but I wasn't sure that the legislation had been enacted. This may affect a few people I know so will pass on the info. Does this affect interest bearing accounts too?

BTW do you think the other party will do anything different?

 

[Ves]

Of course it's a money grab! The Swayne needs cash to get at least close to Budget Surplus.

Can you please explain how this would help get the government closer to budget, let alone balance the budget?

 

[pixel]

Can you please explain how this would help get the government closer to budget, let alone balance the budget?

For every $100 Million stolen from unsuspecting citizens, the Gov'mint doesn't have to steal $100 Million from others, who may be more watchful. It's $100 Million more than they've been ripping off (and wasting) before.

 

[db94]

Labor are soo slimy! if only people realized it, Labor would be ruined

 

[Ves]

For every $100 Million stolen from unsuspecting citizens, the Gov'mint doesn't have to steal $100 Million from others, who may be more watchful. It's $100 Million more than they've been ripping off (and wasting) before.

Are you suggesting that the government take this money and spend it and you can never retrieve it?

What actually happens to it?

Re unsuspecting citizens - the legislation requires the financial institution to contact the account holder by letter to explain that their account is inactive and if no action is taken the account will be sent to ASIC. Are you saying that these people would never know? You might be right - but not in the literal sense you mean - it is more to do with the piss-poor record keeping and their ignorant attitude of the account holder than the bank / government.

 

[RandR]

Are you suggesting that the government take this money and spend it and you can never retrieve it?

What actually happens to it?

Re unsuspecting citizens - the legislation requires the financial institution to contact the account holder by letter to explain that their account is inactive and if no action is taken the account will be sent to ASIC. Are you saying that these people would never know? You might be right - but not in the literal sense you mean - it is more to do with the piss-poor record keeping and their ignorant attitude of the account holder than the bank / government.

They do recognise lost superannuation as revenue. I'm going to assume they treat inactive bank money the same. The individual always has the ability to chase them for it and claim it. But as soon as it hits the books its definitly recorded as gov revenue. (in regards to balancing the books)

 

[Ves]

They do recognise lost superannuation as revenue. I'm going to assume they treat inactive bank money the same. The individual always has the ability to chase them for it and claim it. But as soon as it hits the books its definitly recorded as gov revenue. (in regards to balancing the books)

If a listed company was doing something like this wouldn't an informed individual just adjust the accounts to match reality?

It's not revenue - it's a liability.

 

[Smurf1976]

If a listed company was doing something like this wouldn't an informed individual just adjust the accounts to match reality?

It's not revenue - it's a liability.

In general governments tend to look at the current financial year only.

If your money is transferred to them this year then it's revenue. If you claim it back in 2016 then it's an expense in that year. That's what I'd expect them to do, since it's basically how governments work financially.

Government superannuation schemes used to work the same way. They'd just ignore it completely until you actually retired, then pay your benefits from taxes collected at the time. "Your" money as such never existed in an actual account of any type.

 

[Ves]

If your money is transferred to them this year then it's revenue. If you claim it back in 2016 then it's an expense in that year. That's what I'd expect them to do, since it's basically how governments work financially.

Basically you are confirming what I am saying - it doesn't have any net effect on the budget at all over the long-term unless the person does not claim their money back. Whether it is 3 or 7 years these accounts will end up with the government, and if people want them, they will be claimed back. The government gets little to any benefit in holding it - if past form is true with other things, they'd probably spend more than they earn on administration.

I think the media reports on these kind of things are misleading, a cute fear campaign with zero substance - the government is taking your money, but you can have it back (and it's not like you are going to miss it if you left it sitting idle for years, is it?).

What next - the government is holding millions in PAYG refunds because some people are too lazy to do their tax returns?

 

[sails]

...What next - the government is holding millions in PAYG refunds because some people are too lazy to do their tax returns?

maybe they haven't had that thought bubble yet...

 

[Smurf1976]

I think it's the principle and precedent that is more worrying.

There used to be a lot of talk about so-called "helicopter money" and what it would this concept would look like in a practical application. That question was answered very clearly by the Australian government when they simply handed $900 to practically everyone. No physical helicopters, but it's the best example of the principle being applied anywhere in the world that I'm aware of.

Now we have government deciding to take cash out of bank accounts belonging to private citizens. Another concept that many have pondered over the years.

A lot of things are happening these days that once would have been considered outrageous. There was a time when Australians objected strongly to the notion of an ID card. It was never introduced as such, but it is impossible for most people to go about their lives without one. The population rejected it but it has been introduced nonetheless, he only difference being that is for most people incorporated into their drivers' license.

It's the gradual extension of government that concerns me. Taking $100 million or so isn't really the issue.

 

[Tyler Durden]

I can't imagine anyone on this forum having an inactive bank account

 

[Ves]

Now we have government deciding to take cash out of bank accounts belonging to private citizens. Another concept that many have pondered over the years.

They already have been doing this - nothing seems to be changing but the time-frame. Who bought the original legislation in by the way?

As far as I know Australia is not the only country to do this.

 

[Julia]

Are you suggesting that the government take this money and spend it and you can never retrieve it?

What actually happens to it?

Re unsuspecting citizens - the legislation requires the financial institution to contact the account holder by letter to explain that their account is inactive and if no action is taken the account will be sent to ASIC. Are you saying that these people would never know? You might be right - but not in the literal sense you mean - it is more to do with the piss-poor record keeping and their ignorant attitude of the account holder than the bank / government.

That's not as I heard it discussed by Steve Munchenberg of the Australian Bankers' Assn. He suggested the government have made this decision entirely without discussing it with the ABA. He further suggested the banks should first be given the right to contact their clients before ASIC move in on the money. I'm a bit puzzled as to why he would say this (today) if what you say above is correct.

Basically you are confirming what I am saying - it doesn't have any net effect on the budget at all over the long-term unless the person does not claim their money back. Whether it is 3 or 7 years these accounts will end up with the government, and if people want them, they will be claimed back.

Ves, I think you are perhaps rather missing the point. The arrangement is between the bank and the client. If mutually they are agreed that it's fine to have the a/c sit there unused for up to seven years, at which stage the bank will contact the client, why on earth should the government have the right to interfere in such a private arrangement?
If you don't think it's in order to boost the government's bottom line in this election year or projected to next year, you are possibly being less than realistic imo.

the government is taking your money, but you can have it back (and it's not like you are going to miss it if you left it sitting idle for years, is it?).

Why should the individual be obliged to engage in some lengthy bureaucratic process to get their own money?????

I can't imagine anyone on this forum having an inactive bank account

No? I have just such an a/c Tyler. It has less than $10 in it, but I want it kept open (no fees are attached) in case I want to use it again and do not want to be obliged to go through the tedious process of re-opening, with all the paperwork that is involved in closing then re-opening for my SMSF.
The bank is happy. I'm happy. It's absolutely nothing to do with the government.

 

[bellenuit]

No? I have just such an a/c Tyler. It has less than $10 in it, but I want it kept open (no fees are attached) in case I want to use it again and do not want to be obliged to go through the tedious process of re-opening, with all the paperwork that is involved in closing then re-opening for my SMSF.
The bank is happy. I'm happy. It's absolutely nothing to do with the government.

I was going to respond similarly. I have opened many online savings accounts as I chased the highest interest yield. As I move funds to a new online savings account that offers a higher yield, I leave $10 or $20 in the old account so it remains open should I want to reuse it at a later stage. Even though the amounts are small, I don't see why the government should get their grotty hands on them.