Unclaimed and dormant assets:
A review for the asset management sector


Everybody knows there are a lot of unclaimed assets in the asset management sector, but nobody knows just how much is ”a lot”.

The Financial Conduct Authority

With the changes introduced in 2014 in PS14/9, the Regulator has signalled its intention to turn up the heat on firms to address and resolve their unclaimed assets and to dispose of residual balances. 

The Dormant Assets Commission

Announced in December 2015, the Dormant Assets Commission (DAC) reviewed the ‘dormant assets’ problem. It's report is informative but not conclusive. It expands the current scheme to other asset classes and keeps involvement voluntary. It largely turns the problem over to existing regulators to address.

Increasing audit scrutiny

By qualifying audit opinions, major audit firms are also increasing the pressure on investment managers to resolve their unclaimed assets balances. That pressure will only increase with supervisory action.

Reputational drivers

Increasing attention to the issue will raise the reputation risk of inaction. But firms that act early may even benefit from doing so. 

And because it’s the right thing to do

Simply put, the assets belong to someone else. Investment managers should, at least, make those people – or their estates – aware of them.

The quantum of unclaimed assets – the scale – will impact the scope of the best solution; any solution has to work for all parties.

Very little is known about either the scale of the problem or specific challenges impacting firms holding dormant or unclaimed client assets.This research will seek to fill that gap. It will seek to establish both the scope and the scale of the dormant and unclaimed assets problem and to review the common and distinct issues facing the asset management sector. We will deliver the research directly to participants, research partners and supporting organisations only. The research will form the basis of industry responses to the challenges facing the sector as well as inform the industry and firms about the options available and 

their respective merits. The research will also enable the sector to respond with relevant information to the call for evidence by the Dormant Assets Commission (issued 10 May; closing 10 June 2016) as well as to address the substantive issues the Dormant Assets Commission is likely to raise.

By conducting the research in association with the relevant partners and industry bodies, we aim to provide an authoritative and comprehensive picture of the dormant and unclaimed client assets issues.

 


Some key project documents

 

Research partners

Principal research partner

Legal research partner
 

Data collection & tracing partner
 



The regulator

In October 2015, Assets Recovered presented its business model to the CASS team at the Financial Conduct Authority, who accepted it without reservation.

PARTICIPATING FIRMS

We are seeking the involvement of major UK retail asset managers

Likely to be a maximum of 8 firms

Resolving the dormant & unclaimed assets challenges requires innovation, better information and an independent view. We will address . . .

  • The context & issues
     
  • Scale of the issues
     
  • Solutions to the challenges
     
  • Is there an end-to-end solution?
     
  • Can government help?
     
  • Doing well; doing good
     

Step 1
Data collection

KBMstrategy will work with each firm to establish a valid and operable sample frame of 15,000 randomised client records. We will use secure, online systems offered by tracing provider, Assets Recovered, to collect client data from each participating firm. 

Each participating firm will receive without charge new addresses for all gone-away clients traced by Assets Recovered.

Step 2
Interviews

KBMstrategy will conduct 3–4 interviews with operating and other relevant personnel all participating firms, as well as relevant people in research partners & supporting organisations. 

Step 3
Roundtable

We will convene a roundtable with participating firms to discuss collectively the scope and scale of the problems, current actions to address dormant and unclaimed assets, firm- and sector-level issues as well as potential solutions and impediments to their effective implementation. 


Output 1
Results roundtable

Once we have initial results of the trials and analysis and review of issues, we will convene a second roundtable to share these results with participants, research partners & supporting organisations, to gauge reaction and to collect feedback.

Output 2
Our reporting

Participating firms – along with research partners and supporting organisations – will receive reports covering the following:

(a) The principal report, which will include:

  • results of analysis of industry, firm-level and sample data (not firm identifiers will be used)
  • results of initial tracing activity 
  • answers to the research questions identified in the first section, above, and 
  • other relevant information

(b) A final report – an addendum – will report the performance and outcome of tracing and return of funds to deceased clients’ estates.

Phase 1 reporting late September 2016.

Final reporting by end of 2016.

Output 3
Sector conference

Following completion of the research, we will convene an open industry conference to review the issues, high-level findings and recommendations. Participants will be invited to attend and participate in relevant panels alongside research partners and supporting organisations.

 

The research will consist of two, concurrent streams: (i) data-driven, quantitative research and (ii) qualitative research with participants, partners and supporters


Quantitative research

The sample frame
 

KBMstrategy will work with each firm to establish a valid and operable sample frame of 15,000 randomised client records. 

We will also collect additional, portfolio-level data from each participating firm. 

 

The quantitative research process

We will use secure, online systems offered by tracing provider, Assets Recovered, to collect client data from each participating firm. Assets Recovered will: 

  1. Anonymise the client data and attach socio-economic grouping data to the record then pass it KBMstrategy for subsequent research and analysis; KBMstrategy will not know the source firm for each data set;
  2. Trace all clients (where possible and economically feasible); return ‘living/new address’ client data to each participating firm at no cost;
  3. Approach, using joint-branded communication for each participating firm, the estates of deceased clients to offer to act as agent for return of the unclaimed assets to the client’s estate. 

Visualising the research process

To see a graphic of the unclaimed and dormant assets research process, click on the image below.

 

Qualitative research

Interviews

KBMstrategy will conduct 3–4 interviews with operating and other relevant personnel all participating firms, as well as relevant people in research partners & supporting organisations. 

Roundtable

We will convene a roundtable with participating firms to discuss collectively the scope and scale of the problems, current actions to address dormant and unclaimed assets, firm- and sector-level issues as well as potential solutions and impediments to their effective implementation. 

 

More information . . . 

For the research project and reporting . . .

For data collection and tracing . . .

For the full research proposal . . . 

 

If you are interesting in participating in the unclaimed and dormant asset research, please contact us: