The period after which ‘lost’ insurance policies are transferred to the Government will revert to seven years, the Assistant Treasurer has announced.
In a joint statement from Prime Minister Tony Abbott and Josh Frydenberg, the Government has advised it will amend the Life Insurance Act so that there is again a seven year threshold for lost life insurance policies before they are deemed unclaimed monies.
In 2012, under the Labor Government, the period of time that inactive policies were transferred was reduced from seven years to three years. According to Mr Frydenberg, 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, which in some cases took up to six months.
The Government currently holds around $700 million in lost bank accounts and life insurance policies. In 2011-12, approximately $70 million was transferred to the Australian Securities and Investments Commission (ASIC) as unclaimed money. In 2012-13, after the former government’s change, 156,000 accounts worth around $550 million were transferred to ASIC.
“This caused real financial distress for many Australians, including older Australians and community groups, who were not able to access their own funds when they needed them,” Mr Frydenberg said.
This caused real financial distress for many Australians
The Government will also make changes to protect the privacy of individuals that do have genuinely inactive accounts transferred to ASIC, to address concerns around identity theft. ASIC is currently required to publish an online Unclaimed Money Gazette with detailed personal information. The information published includes people’s name, last known address and the amount of money unclaimed. The Information Commissioner has raised concerns about the potential for identity theft using currently published information.
The Government will remove the requirement for ASIC to publish the Unclaimed Money Gazette and restrict Freedom of Information requests generally to an individual’s own details.
The Financial Services Council (FSC) welcomed the announcement, saying it would save many Australians the unnecessary time and hassle of reclaiming their money.
New FSC CEO, Sally Loane, said: “Under the three year rule there was no nexus between re-uniting people with unclaimed monies and the significant costs and administrative burden that were imposed on the industry.
“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 change will apply to the next unclaimed money deeming date of 31 December 2015.
