House of Representatives

Second Reading Speech

Mr Frydenberg (Assistant Treasurer)

I move:

That this bill be now read a second time.

Today I introduce a bill to reverse the previous government's changes to Australia's unclaimed moneys provisions.

From 31 December 2015, this bill will ensure that funds from Australians' bank accounts and life insurance policies can only be transferred to the Australian Securities and Investments Commission after they have been inactive for at least seven years.

Australia has had provisions to effect the transfer of unclaimed funds to the government since at least 1911. They exist to protect Australians' forgotten funds from being eroded by fees and charges, but no matter what, these funds continue to belong to their rightful owner and can be reclaimed at any time.

Between 1911 and 2012, accounts must have been inactive for at least seven years before funds could be transferred to the Commonwealth. Under these rules, only $70 million in unclaimed funds were transferred to ASIC in 2011-12.

However in late 2012, the previous government reduced the required period of inactivity to three years. This resulted in $550 million from thousands of accounts being transferred to ASIC in 2012-13-an almost eightfold increase in a single year. Many of these accounts were certainly not unclaimed or forgotten, but were transferred to the government regardless in order to improve the budget bottom line.

For many Australians this meant cancelled holidays and delays in purchasing new goods-washing machines, dishwashers, and cars-that were crucial to their families. For some Australians the consequences of not being able to access their hard-earned savings when they needed to were even more severe. Many Australians, particularly in regional areas, were placed in positions of financial difficulty. In the worst cases, some individuals have had to sell their homes. This is unacceptable.

We did not support this change in opposition and, as promised, in government we will make it right. That is why, in the 2015-16 budget, we committed to reforming the unclaimed moneys provisions.

Returning the required period of inactivity before savings and life insurance policies can be transferred to ASIC to seven years will drastically reduce the number of effectively active accounts that are transferred to ASIC each year.

This change will cost the government $285 million over four years, however will save the community $36 million each year in reduced red tape costs as fewer accounts must be transferred from, and returned, to account holders.

To further ensure that only funds that are truly forgotten are transferred to ASIC, this bill also expands the ways in which account holders can keep their accounts active. This bill will ensure that if an account holder alerts their financial institution to the fact that they are aware of their account in any way prior to their funds being transferred to ASIC-including simply checking a balance online-that transfer will no longer occur.

This bill will also exempt children's accounts and foreign currency accounts from the unclaimed moneys provisions entirely.

Many Australians set money aside for their children's future and trust that this money will continue to grow in value and be available for their children when they are ready.

In recognition of this fact and to reward, not punish, those Australians working hard to contribute to their family's future, children's accounts will never be transferred to the government.

Foreign currency accounts, meanwhile, are primarily used by sophisticated consumers to settle complex business transactions.

Not only does transferring these accounts to the government potentially disrupt these processes, it also exposes the account holder to the risk of a loss as their funds must be converted to Australian dollars at the prevailing exchange rate before they can be transferred to ASIC. In line with the government's commitment to protect Australian businesses from excessive red tape, these types of products will also be exempted entirely from the unclaimed moneys provisions.

Not only did the changes made by the previous government leave many Australians financially distressed, the unprecedented growth in the value of money transferred to ASIC also highlighted glaring deficiencies in the way that account holders' personal information is protected.

ASIC is currently required to publish an unclaimed money gazette online with detailed personal information, which includes a person's name, last known address and the amount of money they have unclaimed. The Information Commissioner has raised concerns about the potential for identity theft using currently published information.

Some unscrupulous businesses are also using this information to charge fees as high as 25 per cent to reunite people with their own money. The government and financial institutions do not charge account holders for this service.

To protect those Australians with unclaimed moneys from exploitation, this bill will remove the requirement for ASIC to publish the unclaimed money gazette and will introduce secrecy provisions to ensure that only individuals with unclaimed accounts or those acting on their behalf will be able to access their data through freedom of information requests.

As stated before, this bill delivers on the government's promise to reform the unclaimed moneys provisions and contributes to the government's promise to support Australian business by reducing red tape by at least $1 billion each and every year. This bill will leave more Australians in control of their own finances, better protect their personal information, and leave a safety net in place to protect those with truly forgotten amounts from having their value eroded by fees and charges.

Debate adjourned.