Wealth Blog | 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.