Money belonging to dead people can remain trapped within banks for anywhere from six to 25 years, and there's no duty on financial services companies to identify when a customer has died.
"Death lady" Sue Skeet says banks, insurers and fund managers may hold millions of dollars of dead people's money, and is calling on Commerce Minister Kris Faafoi to force them to be proactive in spotting it, and returning the money to dead people's descendents.
Skeet's NoticeMatch software business lets financial services companies quickly spot deceased estate money that is not been claimed by executors, or insurance policy beneficiaries, but few are using it.
In a bid to lift the lid on the dead dollars in the financial system, Skeet has been tracking down the relatives of dead people with money listed against their name on Inland Revenue's (IR) Unclaimed Money Register to show how money can get lost in the system, and how it's not always hard to find the people it now really belongs to.
When Skeet traced and contacted Eva Sefton in Australia over the $16,000 owed to her deceased father Zoltan Horvath, Sefton thought she must be a con-artist.
"I thought it was probably a scam because there's so much of it going on," Sefton said.
Her suspicion was reasonable. The taxman has issued an unclaimed money phone scam alert, saying: "Fraudsters claiming to be from Inland Revenue Unclaimed Money are phoning people and asking for their personal and financial information."
FORGOTTEN INSURANCE POLICY
Sefton, who can now choose whether to apply to IR as her father's executor to get the $16,156.31 to distribute to his heirs, thought the money owed to her father could be the value of an old "paid up" life insurance policy her father took out.
"I heard at one stage my father opened something up when my mum died in case something happened to him, to pay for him to be buried," she said.
But after her mother's death the family fragmented with siblings going their separate ways, she said.
Horvath, who was born in Hungary, ended up briefly in a rest home in New Zealand, before Sefton discovered where he was living.
"When I found out that he was in a home I went back to New Zealand to pick him up and bring him home over here. He lived with myself and my husband in my own home," she said.
That was in 2008, Sefton said, who lives in the small Australian town of Elliminyt. The former Ford car assembly line worker died in 2010.
CHAOTIC LIVES, UNCLAIMED MONEY
When there was a lot of change in a person's life, it was easy for money and insurance policies to be overlooked on their death, Skeet said.
Executors could not ask banks and insurers about money they didn't know existed.
"Most of us don't live in a Brady Bunch kind of world," Skeet said.
"Many of us have difficult relationships with our parents and siblings.
"We no longer live in villages where we know everything about each other. We are isolated and very separate from our families.
"Financial secrecy and lack of communication in families is commonplace," she said.
Age could also bring confusion. Accounts and insurance policies could be forgotten.
The accounts might eventually be flagged as GNA's, or "gone no address".
After being entirely untouched for between six and 25 years, depending on the kind of account the money was in, banks, fund managers and insurers were supposed to pass unclaimed money to IR to be listed on the Unclaimed Money Register, where it is advertised, and if it remained unclaimed, it became the property of the Crown.
THE DEAD CAN'T SPEAK
"The most vulnerable people when it comes to assets are dead people because they can't speak," Skeet said.
Banks, insurers and find managers generally waited until executors and named beneficiaries on policies to contact them, she said.
"Why aren't these organisations proactive?" Skeet said.
Skeet became "the death lady" after the murder of a friend, followed closely by the suicide of her ex-husband prompted her to set up A Memory Tree, a social enterprise where people could leave digital tributes to the dead.
When lawyers started using the site to monitor for the deaths of clients, Skeet founded NoticeMatch, compiling a database of publicly available data on deaths from the likes of funeral notices.
The government's register of deaths was not public and did not capture deaths among the 650,000 New Zealanders living across the Tasman, she said.
WHAT BANKS DO
Banks identify accounts, funds and policies of dead people when their executors ask for the money.
The recent focus on the poor value of Bonus Bonds, prompted ANZ to reveal that about 740 people a month notified the bank that a Bonus Bonds holder was dead.
But, spokeswoman Siobhan Enright said: "Like most companies across a range of industries we rely on representatives of a deceased customer's estate to notify us when a customer has passed away."
ANZ did monitor for dormant accounts on which there had been no activity, which can happen for many reasons, including people emigrating, Enright said. This was required by the Unclaimed Money Act.
"For a non-interest bearing account we wait six years, whereas we wait 25 years for interest bearing accounts. We also write to these customers every June to remind them of the need to 'reactivate' their accounts," she said.
ach year Kiwibank ran a bank-wide check for dormant accounts which had had no deposit, withdrawal, or written instruction in the past six years, spokeswoman Kara Tait said.
If sums of money over $100 were found, they were paid to Inland Revenue, she said.
Smaller sums were combined in an account and left there until someone asked for them. There was just under $100,000 in that account, she said.
QUANTUM OF DEAD MONEY
It's unknown how much dead people's money remains in the financial system, but Skeet suspected there was a lot.
She was hired last year by an insurer to check how many dead people held its old "whole of life" policies. There were around 2000, she said.
"Selling 'end of life' products, funeral and life insurance, and managing assets should come with an ethical responsibility to regularly check the customers life status. To not do so, is wrong," Skeet said.
Not to do so risked families going into debt to pay for loved ones' funerals, or to struggle financially after a death, she said.
Nick Stanhope, chief executive of New Zealand's largest life insurer AIA, said usually the next of kin of policyholders notified insurers of their deaths.
"Where we are notified, we make contact with the next of kin or executor of the estate."
But, "In some cases, and where we are not notified, we may become aware of a death of one of our customers due to our processes for managing returned mail and non-payment of policies."
Then AIA would try to find and contact the executors.
Cigna chief executive Gail Costa said earlier this year it introduced a proactive process to help identify potential deceased policy holders.
"We are normally informed about the death of a policy holder by the next of kin or the policyholder's estate," Costa said.
"We also cross check our database with government records. This is to help ensure that the next of kin or estates receive the claims they are entitled to. We want to ensure we are looking out for the family in what is a particularly stressful and emotional time."
CALL FOR ACTION
Skeet wanted Faafoi to include a duty on banks and insurers to have systems to proactively check the life status of their customers in his planned "conduct" laws to force them to prioritise customer interests.
Death withdrawals from KiwiSaver
Over 3200 people's KiwiSaver funds were closed after scheme providers were notified of their deaths in the 12 months to the end of March, data from the Financial Markets Authority shows.
"Unpaid monies, unclaimed assets, insurance policies lapsing due to death and not being paid out, are a massive issue.
"With few exceptions, most banks, insurance companies and financial managers do not regularly check the life status of their customers, she said.
"This is a 'hidden' issue that steals from New Zealanders who rightfully own the deceased's assets and should be reunited with them with speed."
