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Wednesday 8 October 2014

14-262MR ASIC concerns see CBA release $2.2 million for 45,000 travel card customers

ASIC concerns have led to the Commonwealth Bank of Australia (CBA) agreeing to release $2.2 million for approximately 45,000 customers who had money left on expired CBA Travel Money Cards.

CBA has also made changes to all its Travel Money Cards so consumers will not forfeit any funds left on expired cards. Instead, any expired funds will be held by the CBA for three years and, if they remain unclaimed by consumers, will be treated as unclaimed money. This will allow consumers to retrieve the money at any time in the future.

Before these changes, funds left on CBA Travel Money Cards for 12 months after card expiry could be forfeited to the CBA.

ASIC is reviewing 13 products from nine issuers as part of its broader work in this area. In particular, ASIC is looking at how consumer funds on expired multi or single currency travel cards are dealt with by card issuers. In many cases, other card issuers charge fees which can whittle away balances over time.

Deputy Chairman Peter Kell said, 'Consumers should make sure they understand the fees and charges that apply to their reloadable cards. Withdrawing funds as soon as the card is no longer needed is one way to avoid paying these fees.

'ASIC is reviewing the operation of other travel cards in the market, with a particular focus on identifying any unfair contract terms or deficient disclosures. We will take action where appropriate'.

Consumers who consider they may be entitled to funds on expired travel cards should contact the institution where those funds were last held. Consumers can search for unclaimed money amounts over $500 (money that has been with an institution for more than three years) on our MoneySmart website.

Consumers who think they may have left funds on a CBA Travel Money Card can contact the CBA for further information about reclaiming their funds.

ASIC acknowledges CBA's co-operation in this matter.

Background

Many reloadable card products, including some travel cards, allow consumers to access funds they have loaded onto the card at many locations where debit and credit cards are used. Travel cards allow consumers to transfer funds into one or more currencies for use overseas.

Funds on reloadable cards are generally not protected by the financial claims scheme (FCS). Under the FCS, the Government guarantees deposits up to a cap of $250,000 per account-holder, per authorised deposit-taking institution.

Under section 69 of the Banking Act 1959, some types of funds held by authorised deposit-taking institutions that are unclaimed by consumers for a period of time, currently three years, must be transferred to the government if the balance is more than $500. These funds earn interest and do not incur fees and charges once transferred. Unclaimed money that are less than $500 may be held by the relevant institution

Last updated: 08/10/2014 12:00