I came across this interesting story in The Times newspaper quite some time ago. Do note that the article was written with the United Kingdom in mind. In Malaysia, there is something similar called the Unclaimed Moneys and if your money lies dormant and unclaimed in the bank for more than seven years, it will be transferred to the Treasury of the Ministry of Finance.When I was still working in the banking industry more than 10 years ago, the banks would start to transfer the money in dormant accounts to the Unclaimed Moneys in January or February of every year. Normally, the amounts in the accounts are rather small but once in a while, there will be rather substantial amounts that are transferred out. Anyway, here is the newspaper story:
Millions of savers may be worrying about falling interest rates – but, in fact, many already have hundreds or even thousands of pounds lying untouched in forgotten accounts or investments.
Many banks and building societies have stepped up their campaigns to reunite customers with lost cash before the Government pools dormant accounts for “community use” next year. Similarly, large companies increasingly are using specialists to track down shareholders who have gone off the radar.
Towards the end of 2009 the Government is going to pool the £1 billion lying in dormant bank and building society accounts – those in which there has been no customer-initiated activity for 15 years – and place the money in one FSA-regulated central reclaim fund.
This fund will then be “reinvested in the community”, particularly in youth services and financial inclusion schemes, across the UK. However, if someone later comes forward to claim their money, the fund will be used to pay account holders.
So while there is no urgent need to claim your cash before it is spent on disadvantaged youth, it is still a good idea to claim assets as soon as possible – after all, the money is yours.
Rachel le Broqc, of the Building Societies Association, says that there are many reasons why accounts become dormant. She explains: “People move house and forget to inform their building society or bank of their new address; childhood accounts become forgotten; or people pass away and their heirs may not be aware of the existence of such accounts.”
An amendment to the Banking Code this year meant that all banks now have to make an effort to reunite customers with their lost assets. Halifax, Lloyds TSB and HSBC have all introduced reunification programs recently. HSBC, which is writing to customers who have not used their accounts for more than two years, says that the average amount in a dormant account is £1,400, although it has 17 accounts with balances of more than £100,000.
However, you do not need to wait for your bank to contact you. Simply go online at www.mylostaccount.org.uk to search for lost accounts. The website covers 42 banks, all 59 UK building societies and all National Savings & Investment products. It was introduced at the start of the year and receives about 760 searches a day. Although the service is free, you could have to wait up to 12 weeks for a response to your search.
With the large number of takeovers and mergers of UK-listed companies, it can be difficult for shareholders to keep track of their holdings. And if you move house and forget to inform your stockbroker or the share registrar, assets may soon become “lost” and any dividend cheques may not reach you.
The Unclaimed Assets Register has a database of unclaimed life policies, pensions, unit trust holdings and share dividends drawn from many companies. It may be able to help if you vaguely recall paying into a policy in the past but have lost the paperwork and forgotten the name of the company. It can also help to track down policies of a deceased person.
The service, run by Experian, charges a one-off fixed fee of £25, regardless of the outcome of the search – only about 10 per cent of searches are successful. But when assets are found, the average payout is £6,000. Go to www.uar.co.uk, or call 0870 2411713.
Richard Hunter, of Hargreaves Lansdown, the independent financial adviser, says: “If you remember owning company shares but have lost your share certificate, approach the registrar of that company and request a new one – this costs about £25. If you find an old share certificate, either yours or that of someone who has died, contact the registrar named on the certificate. There are now only three registrars – Capita, Computershare and Equiniti.”
You may be contacted by an asset reunification company. These specialise in reuniting “lost” shareholders or beneficiaries with assets that are rightfully theirs. Many large companies have hired such specialists to track down lost shareholders. For example, BT, Southern Water and O2 have hired a company called Prosearch, which is owned by Equiniti, while National Grid, Alliance & Leicester and British Airport Authority have hired Capita Tracing Solutions.
Such companies are likely to contact you in writing and ask you to confirm your identity details, such as your previous address, before telling you what assets you can claim. Unfortunately, the asset reunification industry is unregulated – companies cannot register with the Financial Services Authority – so before entering into correspondence with any company that sends unsolicited letters, make sure that it is legitimate (see box, right).
There will also be a fee. For example, Prosearch charges about 12 per cent of the value of assets reclaimed. If there is a large sum involved, you may wish to do the legwork yourself.
Some companies, such as Fraser & Fraser and Title Research, specialise in tracking down beneficiaries of a person who has died without leaving a will and with no obvious next of kin. Fees can vary from 5 per cent for the recovery of cash in a bank account to 40 per cent for the recovery of a large and complicated estate from overseas.
In these cases, you may have never even heard of the family member who has died – so tracking down such assets yourself, without the help of a specialist, can be almost impossible.
Neil Fraser, of Fraser & Fraser, says: “If you have lost touch with a family member and think that you might be an heir, you can search for the will through the Probate Registry. For details, go to ancestor-search.info/NAT-Probate.htm or call 01904 666777. If no will was made or you are not aware of any lost relatives, then you will have to hope that we come knocking on your door.”
Caution is key
- Legitimate asset reunification companies rarely approach potential clients via e-mail. Never disclose personal information to the sender of an unsolicited e-mail. For general advice on avoiding internet-based scams, visit GetSafeOnline.org.
- A letter should include the company’s address and phone number – check that these are listed in the Yellow Pages and visit the company’s website, which should appear professional. All genuine companies are listed on the Companies House website at www.companieshouse.gov.uk.
- Be wary of any company that promises money in exchange for an upfront fee. The fees charged by legitimate companies are normally a percentage of the total assets reclaimed. However, this should always be discussed and agreed in advance.
- If a company claims to be owned by another, call the latter – on a number you have sourced yourself – to check.
- If you suspect a scam, do not respond. Instead, contact Consumer Direct on 0845 4040506, or report it online, using the “report a scam” form at ConsumerDirect.gov.uk.
CASE STUDY: Unexpected windfall
Frances Blackmore, a retired English teacher from Brighton, recently received £1,700 from “lost” shares in O2, the mobile phone company.
Mrs Blackmore, right, received a letter from Prosearch, the asset reunification company, asking for identity confirmation to reunite her with some unclaimed assets.
“The letter was quite vague and I wondered at first if it was a scam,” she said. “But after making some inquiries about the company I decided to go ahead and reply. I was then told that I held 1,026 shares with O2, which is now owned by Telefónica, worth £2,052.”
Mrs Blackmore thinks that her late husband held shares in British Telecommunications (BT), from which O2 demerged in 2001, and that these were overlooked when his estate was settled.
Prosearch charged Mrs Blackmore a fee of £256 for its service, 12 per cent of her holdings, which reduced her payout to £1,736 after VAT.
“I know that I could have tracked down the shares myself, but I decided to pay the company for doing the work for me. The process was very easy. Once I had agreed to the service, I completed a claim form and received the cheque within two weeks. It was an unexpected windfall so I’m pleased.”
And now you need a safe bolt hole
Given the financial crisis, it is likely that you will want to keep any reclaimed money as safe as possible, writes Mark Bridge. Finding a haven that offers a return can be a headache, though, especially when savings rates have tumbled with recent base-rate cuts. Here Times Money lists the options.
Savings accounts: Dennis Hall, of Yellowtail, the independent financial adviser (IFA), says that cash is the most obvious refuge in a credit crunch. He adds: “It is best to spread your money over the best-paying savings products on the high street.”
You can compare deals at comparision websites, such as Moneysupermarket.com, and in the best-buy tables in Times Money (see pages 10-11).
Kevin Mountford, of Moneysupermarket.com, says that the best rate for an instant-access account is now 6 per cent, from Tesco Personal Finance. This is an internet account, however, and the headline rate includes a 12-month 1.5 per cent bonus on a much less competitive underlying rate of 4.5 per cent. Note also that the bank is “reviewing” its rates in light of the latest cut in the base rate.
Mr Mountford adds that customers willing to lock in their money can secure a rate of 5.75 per cent for one year with Anglo Irish Bank’s fixed-rate bond. He also suggests a regular saver account, saying: “You have to put in money every month, but you can get rates of 6 per cent with Barclays and Halifax.”
When spreading money between accounts, remember that an individual’s savings are guaranteed up to £50,000 per financial group and that different brands may be part of the same group. For example, Halifax and Birmingham Midshires are both part of HBOS.
Isas: Mr Mountford urges savers to look at their tax-free Isa options. “Do not wait until the April deadline,” he says. “Rates may fall, so it’s best to get in now.”
He adds that Nationwide’s cash Isa options are the most competitive right now, paying up to 4.25 per cent.
Money market funds: These are sometimes considered the safest place after cash and bank deposits. Mr Hall says that they can offer a better return than the latter, but choosing the right fund is critical. “They are for those with significant cash – and seek advice,” he adds.
Premium Bonds: These offer the chance to win prizes up to £1 million in place of interest payments. However, the payouts depend on interest rates – and recent base-rate cuts mean that standard savings accounts are more competitive.
Gilts: Index-linked government bonds pay a set rate above inflation and can be purchased from the UK Debt Management Office (DMO.gov.uk) or through a stockbroker. However, Mr Hall says that they are currently overvalued.
Index-linked savings certificates: These products from National Savings & Investments offer tax-free returns and pay guaranteed interest at 1 per cent above inflation over three and five-year terms.
Gold: The most ancient safe haven has performed well in recent weeks, with the price per ounce climbing from less than $700 in late October to about $830 this week.
Investors can buy gold through exchange-traded funds (ETFs), which track the gold price and can be bought through a stockbroker and held tax-free in an Isa. Alternatively, you can buy bullion – kept in secure storage for a small fee – at Bullionvault.com. Mark Dampier, of Hargreaves Lansdown, the IFA, is “bullish” on gold and says that investors should put about 5 per cent of their portfolio into the metal.