The Government has today reported that as much as £2 billion is sitting idle in dormant accounts such as share trading accounts, ISAs, pensions and insurance products. That includes £715 million alone in investment and wealth management accounts.
This is noted by the Independent Dormant Assets Commission set up by the Government which has looked at whether the existing scheme for dormant bank and building society accounts should be extended. Minister for Civil Society, Rob Wilson, suggests that this money could help change millions of lives if it was donated to charities.
Readers may not think they will ever lose track of accounts but as folks get older, move house or emigrate, accounts are often forgotten. Regrettably the use of nominee accounts to trade shares hardly encourages stockbrokers and platform operators to follow up on inactive accounts. Any dividends on shares simply accumulate within the client account but presently the account operator gets interest on that which they retain. This can continue for ever (even after the client has died) unless inactive accounts are chased up. The lack of even regular postal communications to the last recorded address now that everything has moved on-line makes it easy to lose track of clients and the longer it is left, the more difficult it is to trace account holders. With digital communication being the norm, and people changing email addresses regularly, so that messages to them just disappear into the ether you can see why this is a growing problem and why the sums involved have become so large.
When investors are on the share register, dormant accounts and the associated dividends return to the company who issued the shares eventually so they revert to the benefit of other shareholders. Whereas with nominee accounts the nominee operator gets the benefit.
So this is yet another dubious aspect of the nominee system and why stockbrokers are so keen on nominee accounts perhaps. ShareSoc has of course been complaining about the iniquities of the nominee system for some time.
The Commission has suggested that the introduction of a scheme to ensure these dormant accounts are donated to good causes should be voluntary, but it would surely be better that it was compulsory. Note though that no client can lose money as a result if they reappear. They can always reclaim the lost assets in any case.