If you have a lump sum that’s been sitting snug in a bank account waiting for a rainy day, this a bad weather warning. From 31 May any bank account that has been inactive for more than 3 years will be claimed by ASIC.
New legislation has dropped the previous threshold for inactive bank accounts from 7 years, down to just 3 years. So what can you do to avoid your money and your precious time from being dragged through the reclaim process? It’s as simple as drawing as little as $1 from your account, purely to show that the account is still under your watchful eye.
Although many are skeptical about the law being dropped down to just 3 years, believing it is just a simple pre election cash grab by the government trying to keep its promise to return to surplus, it does make it easier for Aussies to be reunited with long lost funds.
When a bank account sits dormant, there is no easy way for people to search out the lost money. With one of the most common reasons for bank accounts to be left unclaimed being because the owner never updated their address and contact details, it makes it difficult for banks to notify the rightful owner. But once the funds are in ASIC’s hands, beneficiaries are able to seek out the funds easily.
According to the MoneySmart website there is more than $670 million in lost shares, bank accounts and superannuation already waiting to be claimed.
If you’re suspicious (or optimistic) you have unclaimed funds, I would definitely recommend taking a minute to use MoneySmart’s unclaimed money search. And if you do find your name on the list, you’ll need to grab the Original Transaction Record that ASIC will provide and then contact the institution that held the funds.
Will there be a small fortune waiting for you?
Often money left in an inactive bank account simply evaporates from bank fees and charges on the account. By comparison, funds reclaimed by ASIC will earn interest at a rate based on Consumer Price Index Inflation, plus, this amount is tax exempt so this new law could be a good savings strategy!
Here’s an example from ASIC’s online database and how the scheme will benefit Australian’s whose accounts end up in the lost and found.
Mr Kenny from Cremorne had his $4,779 Commonwealth Bank account transferred
as unclaimed money in 1971, after being inactive since 1964. If interest had been paid
at the rate of CPI inflation since 1971, he (or a descendent) would receive $46,892 if he
reclaimed the money today. Instead, because no form of interest is currently paid, if
he (or a descendent) were to claim the money today, he would only receive $4,779 – a
loss of $42,113 in today’s dollars.
But before you get too excited, interest paid on inactive accounts will only come into effect from 1 July 2013.
I wish I had forgotten about a large sum of money I put away 4 years ago, amongst other good reasons, this would be a first hand review of the reclaim process. But if you’re about to go through the process, we would love to hear a report back in our comment section and any helpful advice you can pass on to your fellow cash claimers.