Use it or lose it – inactive bank accounts
A reader was shocked to discover HSBC had frozen and closed her passbook savings account, because it was dormant, without warning her. She worries that others might fall foul of this, especially people who don’t check their accounts often, such as the elderly.
She writes that her HSBC passbook account was dormant for 18 months and became inactive after five years. Her last withdrawal was in May 2008. “HSBC froze my account in May 2013,” she explains, when it reached the five-year limit, but she did not find out until July 5, 2013. Customers might indeed be confused by HSBC’s definition of “inactive”, because only withdrawals are considered as transactions, while deposits and interest payments made by the bank are not. Her question is: why aren't customers told, and why is it not included in the terms and conditions? “No one knows: it is not stated anywhere,” she adds.
Room for confusion
It’s easy, sort of, to see how the account fell dormant. Five years is, let’s face it, quite a long time. She linked her Passbook Account via an Integrated SmartVantage account and received a statement with both balances every month. Nothing seemed amiss and she received no warnings about inactivity. However, on July 5, when she tried to access her accounts via the internet, the Passbook Account balance had vanished.
HSBC hotline told her that she must have not accessed the Passbook Account for over five years and therefore the account was now inactive/frozen – and, could not be reopened.
She was told to fill out an Unclaimed Money Form, authorise the bank to transfer the money into another account and close the inactive one.
Branch bank staff insisted she had been notified. When she said no, they suggested she had not updated her contact details, but on checking, her address was current.
Elusive terms and conditions
She googled and searched HSBC's website, but failed to locate the account’s terms and conditions. When she finally found them and studied both Chinese and English versions, she found no clause stating when and how a Passbook Account becomes dormant, inactive, or frozen nor whether such accounts can be reopened.
Monthly service charges arise if the balance falls below HK$2,000 when it becomes inactive or frozen, a customer relations manager told her, adding that six months after the bank applied such charges, they would send a notice/reminder. But this was not nailed down anywhere either. “I could not locate such clauses on the terms and conditions,” said our reader. It just said: "Accounts with zero balances or accounts which remain inactive for five years are liable to be closed by the Bank, in the absence of the depositors' specific instructions to the contrary."
Confusingly, HSBC then told her that since her account was inactive, with a balance above the minimum, no advice would have been sent and offered to open a new Passbook account. Meanwhile, her money is still sitting in an internal temporary/ledger account which she has no access to. If you are confused by all this, so was she, and so am I.
She is still worried that if she re-opens a passbook account, it could become inactive, due to the woolly terms. “It is not clearly stated what counts as "a transaction" or "an activity" in order to prevent the account from becoming dormant/inactive/unclaimed,” she says.
Conclusion: HSBC staff and customers seem equally baffled by the bank’s rules. So if you open an HSBC passbook, or any other bank account, study the small print. And don’t let the account become inactive.
Terms and conditions
Here, for the record, are HSBC’s passbook savings account terms and conditions, as sent to me:
- If there is no withdrawal on the account, it will turn dormant after 18 months and will become 'unclaimed' after five years.
- An advice is issued to notify the customer of the inactive account status, if the balance falls below HK$2,000. There is an inactive account fee of HK$100 half yearly, i.e. end of Jan/Jul for dormant accounts of 24 months and with balances below HK$2,000. If the balance is over HK$2,000, no advice is sent.
- The dormant account can be reactivated upon proper identification of the account holder.
- When the account remains inactive for five years, the balances is transferred to a central account. We will continue to hold the balance for the customer with interest, until they claim back the funds, or open a new account. Customers can then instruct the bank what to do with the money.