Banks warn Government set to take inactive accounts
Photo: The Commonwealth will take control of accounts that have been dormant for at least three years.
Hundreds of millions of dollars in inactive bank deposits are likely to flow to the Federal Government from May.
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."