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House of Representatives

Banking Amendment (Unclaimed Money) Bill 2013

Explanatory Memorandum

(Circulated by the authority of the Parliamentary Secretary to the Treasurer, the Hon Bernie Ripoll MP)

Glossary

The following abbreviations and acronyms are used throughout this explanatory memorandum.

Abbreviation Definition
ADIs Authorised deposit-taking institutions
ASIC Australian Securities and Investments Commission
TLA Act Treasury Legislation Amendment (Unclaimed Money and Other Measures) Act 2012

General outline and financial impact

Amendments and transitional provisions

The Bill amends the Banking Act 1959 (Banking Act) to exempt reactivated accounts from being reported and transferred to the Commonwealth as unclaimed moneys and to allow the Commonwealth to provide refunds to authorised deposit-taking institutions (ADIs) if moneys are collected unnecessarily.

The Bill also provides a transition provision for unclaimed moneys collected under the transactional provision of the Treasury Legislation Amendment (Unclaimed Money and Other Measures) Act 2012 (TLA Act). Reactivated accounts collected under the supplementary statement and payment arrangement will be excluded from the statement and payment obligation. If ADIs have already reported and transferred the reactivated accounts, the Commonwealth will refund these moneys to ADIs and their owners upon application.

Date of effect: Amendments to the Banking Act and the transitional provisions will take effect the later of: the start of the day after Royal Assent or immediately after the commencement of item 1 of Schedule 1 to the TLA Act (that is 1 July 2013).

Financial impact: The financial impact from the Bill is likely to be low but is difficult to quantify due to insufficient data being available.

Human rights implications: This Bill does not raise any human rights issues.

Compliance cost impact: Low

Summary of regulation impact statement

Regulation impact on business

Impact: Low

Main points: Office of Best Practice Regulation has advised that a Regulation Impact Statement is not required.

Chapter 1 - Amendments to the Banking Act 1959

Outline of chapter

1.1 The Bill will amend section 69 of the Banking Act to exempt reactivated accounts from being reported and transferred to the Commonwealth. It will also give the Treasurer power to refund moneys to authorised deposit taking institutions (ADIs) if the moneys are collected unnecessarily.

1.2 The Bill will provide transitional provisions for the supplementary statement and payment allowing ADIs to exempt reactivated accounts from being reported and transferred to the Commonwealth and give power to the Treasurer to refund any reactivated accounts which have been already collected.

Context of amendments

1.3 The TLA Act reduces the inactive period before unclaimed moneys transferring to the Commonwealth from seven years to three years. To assist ADIs to implement the change, the TLA Act also provides a transitional arrangement, which allows ADIs to choose an assessment date between 31 December 2012 and 30 May 2013 and report unclaimed moneys to the Commonwealth by 31 May 2013 (Items 1 and 8, TLA Act).

1.4 With the flexibility provided in the transitional arrangement, ADIs are expected to assess the moneys at an appropriate date and transfer them to the Commonwealth by the due date.

1.5 However, some ADIs have nominated an assessment date and subsequently allowed transactions (that is withdrawals or deposits) on accounts which have been already assessed as unclaimed on the assessment date ('reactivated accounts'). Under the existing legislation, ADIs are required to report and transfer all unclaimed moneys as assessed on the applicable assessment date, including reactivated accounts, to the Commonwealth regardless of whether transactions have been made on the accounts prior to the reporting date. [Subsection 69(3), Banking Act; Item 8, TLA Act]

1.6 Consequently, these ADIs would either commit an offence of not transferring all unclaimed moneys to the Commonwealth or need to close the reactivated accounts and transfer them to the Commonwealth.

1.7 On the other hand, some ADIs have reported and transferred the unclaimed moneys to the Commonwealth, including the amounts for reactivated accounts. However, rather than closing and transferring the reactivated accounts, ADIs kept the reactivated accounts active and retained the balance amount but paid the required unclaimed amounts from their own accounts. The Commonwealth does not currently have power to refund moneys to ADIs directly though ADIs are the intermediary returning unclaimed moneys to their owners.

Summary of new law

1.8 The new law amends the Banking Act to allow ADIs to exclude reactivated accounts from their reporting statement and unclaimed moneys payment to the Commonwealth for future years and the supplementary reporting and payment due on 31 May 2013.

1.9 The new law allows the Treasurer to provide refunds directly to the ADIs who submit unclaimed moneys unnecessarily, such as payment for reactivated accounts.

Comparison of key features of new law and current law

New law Current law
Allows ADIs to exclude accounts that have transactions after being assessed as unclaimed from unclaimed moneys which need to be reported and transferred to the Commonwealth. ADIs must report and transfer the sum of unclaimed moneys as assessed on the assessment date to the Commonwealth regardless of whether accounts have been transacted by their owners before moneys are transferred to the Commonwealth.
Allows the Treasurer to refund moneys to ADIs that are collected unnecessarily. The Treasurer does not have power to provide refunds to ADIs rather than using ADIs as intermediary to return moneys to their owners.

Detailed explanation of new law

1.10 The Bill extends the coverage of subsection 69(2) to reactivated accounts. The debiting of a fee from and the crediting of interest to the reactivated accounts are not deemed as transactions, that is withdrawals or deposits. [Schedule 1, item 1, subsection 69(2)]

1.11 The Bill excludes reactivated accounts from being reported to the Commonwealth. ADIs must report to the Commonwealth the total sums of unclaimed moneys as at end of the year excluding reactivated accounts and other already specified accounts (that is retirement savings accounts and first home saver accounts). [Schedule 1, item 2, subsection 69(3)]

1.12 The Bill clarifies that the reporting statement should set out the amount required to be paid under subsection 69(5). [Schedule 1, item 3, subsection 69(4)(b)]

1.13 The Bill excludes reactivated accounts from the unclaimed moneys payment to the Commonwealth. When ADIs deliver the statement, they must pay the total of all sums of unclaimed moneys reported in the statement in accordance with subsection 69(3). [Schedule 1, item 4, subsection 69(5)]

1.14 The Bill clarifies that it is an offence if ADIs do not pay the amount as required by subsection 69(5). [Schedule 1, item 5, subsection 69(5A)(a)]

1.15 The Bill allows the Treasurer to provide refunds to an ADI if the Treasurer is satisfied an overpayment is made by the ADI in relation to unclaimed moneys. [Schedule 1, item 6, subsection 69(7B)]

1.16 The Bill allows the Consolidated Revenue Fund to pay for the refunds to ADIs under subsection 69(7B). [Schedule 1, item 7, subsection 69(8)]

Application, transitional and savings provisions

1.17 The amendments made in Schedule 1 will apply in relation to statements required to be delivered for the year ending on 31 December 2013 and future years.

1.18 Items 1 to 5 of Schedule 1 will apply and are taken to have applied to supplementary statement and transfer that due on 31 May 2013.

1.19 For ADIs that have not yet reported and transferred the supplementary moneys to the Commonwealth, they can exempt reactivated accounts from their reporting statement and unclaimed moneys payment to the Commonwealth.

1.20 For ADIs that have transferred the supplementary unclaimed moneys including the amounts of reactivated accounts to the Commonwealth, the Commonwealth can refund the amounts for reactivated accounts to the ADIs upon the ADIs' written application. The ADIs can retain the remainder of the refunds after paying reactivated account holders the amount owed. It is an offence if the ADIs do not return the correct amount owed to the reactivated account holders.

1.21 The Treasurer can delegate his or her functions or powers under the transitional provision, that is item 9, Schedule 1, to the Australian Securities and Investments Commission (ASIC) and a member of staff of ASIC.

1.22 Regulations made under the current subsection 69(3) will still be in effect.

Chapter 2 - Statement of Compatibility with Human Rights

Banking Amendment (Unclaimed Money) Bill 2013

This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

These amendments will ensure ADIs comply with the legislation and enable some account holders to reunite with their moneys sooner.

Human rights implications

The Bill does not engage any of the applicable rights or freedoms.

Conclusion

This Schedule is compatible with human rights as it does not raise any human rights issues.

The Hon. Mr Bernie Ripoll, Parliamentary Secretary to the Treasurer

Index

Schedule 1: Banking Act 1959

Bill reference Paragraph number
Item 1, subsection 69(2) 1.10
Item 2, subsection 69(3) 1.11
Item 3, subsection 69(4)(b) 1.12
Item 4, subsection 69(5) 1.13
Item 5, subsection 69(5A)(a) 1.14
Item 6, subsection 69(7B) 1.15
Item 7, subsection 69(8) 1.16


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