Term Deposit Accounts and the Inactive Bank Account Legislation 2013

The Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012, has raised many questions about what happens to peoples money if they do not touch it for over 3 years, and the bank cannot contact them to keep the account active.

One such question has been regarding TERM DEPOSIT accounts.

This is answered in the 2012-13 Budget with the following statement:

The Government will implement reforms that will preserve the value of unclaimed bank account and life insurance policies.

The Government will reduce the period of inactivity before bank accounts and life insurance policies are required to be transferred to the Australian Securities and Investments Commission (ASIC) from seven years to three years. In line with existing arrangements for life insurance policies, the period of inactivity for term deposits will commence from when the term deposit matures. This reform will take effect from 31 December 2012.

Individuals can reclaim bank accounts and life insurance policies transferred to ASIC at any time, however no form of interest is currently paid when they are reclaimed. In addition to the above reform, the Government will pay interest at a rate equivalent to Consumer Price Index (CPI) inflation from 1 July 2013 on all bank accounts and life insurance policies reclaimed from ASIC.

This reform will benefit individuals with unclaimed money by protecting the real value of these monies when they are transferred to ASIC.

This seems to confirm that Term Deposits do not need any activity, for the agreed term.

At the conclusion of the term, the bank, if it cannot contact the customer, will need to transfer the funds to a deposit account, before they can be sent to ASIC.

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