Australians have lost $700 million in bank savings - but the government knows where to find it

Breaking Bad / AMC

The Abbott government has announced plans to reverse a Labor policy that saw it claw $550 million from the dormant bank accounts of Australians in a year, promising to return the money to its rightful owners.

Currently, around $700 million sits in ASIC coffers from lost bank accounts and life insurance policies after former treasurer Wayne Swan reduced the definition of an inactive bank account from seven years to three in 2013.

In 2011-12 around $70 million was transferred to ASIC as unclaimed money. In 2012-13, after the former government’s change, 156,000 accounts worth around $550 million were transferred.

Reclaiming the money can take up to six months.

Prime minister Tony Abbott announced a shift back to the seven year limit, and exempted children’s bank accounts from the rules.

The Government will also scrap rules requiring ASIC to publish an online Unclaimed Money Gazette, which scammers have been using to contact people with unclaimed money and then charging them up to 25% of the value to return it.

The prime minister said the changes will also cut compliance costs by $36 million. The changes will apply to the next unclaimed money deeming date of 31 December 2015.

Anyone who thinks they have unclaimed money can check and get it returned, free of charge from the ASIC MoneySmart website.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.