Memorandum submitted by Stephen Wynn
The expression "unclaimed assets"
puts the onus on investors to claim their assets. They may not
realise that they have lost them. There should be an onus on financial
companies to keep track of their customers. This is the topic
of "lost investors" rather than "unclaimed assets".
A Commission on Unclaimed Assets is only looking at one side of
the coin. There should arguably also be a Commission on Lost Investors.
1. Everyone should have a unique identity
2. This identity number should be on all
the "products" of the financial industry.
3. It should be possible for financial companies
to find someone's whereabouts from this identity number.
4. There should be legislation to require
financial companies to use the Letter Forwarding Service if they
have lost track of their investors.
1. The Letter Forwarding Service
1.1 The Department of Work and Pensions
"DWP provides a letter forwarding service
for pension and insurance companies wanting to forward beneficial
information to customers, usually about pensions or insurance
This does not mention banks or building societies.
1.2 Personal addresses will be recorded
on the new National Identity Register. Perhaps this will be useful
for the Letter Forwarding Service of the DWP or the Register could
provide its own letter forwarding service.
2. What is a dormant account?
2.1 The website of the FSA answered the
"What is a dormant account?
If an account has not been used for some time (firms
may have different definitions, but usually a year), the bank
or building society will write to the customer asking them if
they want the account to remain open. If contact has been lost,
the bank or building society will no longer send out mail and
will class the account as "dormant"."
2.2 There is no mention of the Letter Forwarding
Service. Nor is there anywhere on the website of the FSA. This
definition of dormant account is no longer there. I made a copy
www.comparativetables.com/fsa1.htm. There is however
another definition of dormant accounts on the website of the FSA:
"Check whether you've got any personal savings
or current accounts that you haven't used for a while, maybe you've
moved home and forgotten to notify your bankthese are known
as dormant accounts."
2.3 The British Bankers' Association also
answers the question:
"What is a dormant account?"
If you have a personal savings or current account
and there have been no transactions (withdrawals or deposits)
on it, other than transactions initiated by the bank (such as
interest and charges), for a set period (usually at least a year)
the bank hasn't heard from you during that time
The bank will write to you at least once at the last
address they hold for you, unless mail has previously been returned
from there, to ask if you want to keep the account open.
If the bank receives no reply after a set period,
usually between six weeks and three months, your account may be
considered "dormant", and the bank will treat your account
differently from a "live" account."
2.4 There is again no mention of the Letter
Forwarding Service. Thus a reason for unclaimed accounts seems
to be that banks and building societies are not using the Letter
3. Identity numbers
3.1 If a personal identity number were on
all kinds of financial assets, such as bank accounts and life
assurance policies, then this number could be used to trace the
owners. Everyone will be given a National Identity Registration
Number when they register on the National Identity Register.
3.2 National Insurance numbers are quite
often on various "products". An IFA Evan Owen (website:
www.ifasok.co.uk), agrees that "NI numbers should be attached
to any investment product". He explained in an e-mail:
"NI Numbers are recorded for anything that
has a "tax efficient" status, this includes TESSAS,
PEPS, ISAS, Personal Pensions, Executive Pensions, Occupational
Pensions, FSAVCs, AVCs, Stakeholder Pensions and the up-and-coming
"Sandler Suite" of products. I have also seen NI numbers
on Mortgage Endowments, it depends on the insurers and the products
The bank and building society accounts, TESSAs,
PEPs, ISAs, insurance bonds which I have seen did not contain
We need a system which is more systematic, at
1. Everyone does not have a unique NI number.
2. They are not on all the "products"
of the financial industry.
3. Financial companies often lose track of
their customers, especially when they move house.
4. Orphan funds
4.1 The origin of the orphan funds of life
assurance companies seems academic, and opinions differ. They
seem to arise largely from policies for which there are no payouts
when policies mature, that is unclaimed assets.
4.2 An article There's £50bn going
beggingcould any of it be yours? (26th October, 2004
implies that all orphan funds come from unclaimed assets. It starts:
"Billions of pounds are held in orphan funds, untouched by
those entitled to it...".
4.3 Another article Aviva names adviser
to handle orphan assets worth 2.1 bn pounds (3rd February,
2006, http://www.abcmoney.co.uk/news/0320061856.htm) says that
orphan funds come entirely from the under-declaration of bonuses:
"The orphan assets are formed when some
of the returns from investments by the insurers are not allocated
to policyholders as soon as they are earned."
4.4 In the US:
"More than one-quarter of all life insurance
policy benefits go unclaimed and unpaid on death of the insured,
due to long dormancy periods and because family members aren't
always aware a policy exists." (www.missingassets.com/insch.htm)
5. Finding customers
5.1 Banks say "we make every effort
to find lost customers". They do not even use the Letter
Forwarding Service. A contributor to a discussion said:
"Why doesn't each bank have a web site listing
all dormant accounts. Just name, address, branch, date of last
transaction. Then at least we could check for old family members.
I cannot believe that Banks put much effort into finding the owners
of the dormant accounts. Its not in their interest." (boards.fool.co.uk/Message.asp?mid=10368594)
5.2 This is similar to the suggestion of
Cancer Research UK:
5.3 There needs to be legislation to specify
what financial companies must do to find lost customers, especially
the use of the Letter Forwarding Service.
6. The distribution and use of unclaimed assets
6.1 In my opinion unclaimed assets with
financial companies should be distributed to the customers of
these companies, rather than to charity. Some of the money could
be spent setting up a system to ensure that assets are not left
unclaimed in future.