Orphan Assets and Unclaimed Assets
by Stephen Wynn

The FSA explains dormant accounts in its Consumer Help section:

"If an account has not been used for some time (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'."

An account may become dormant because the holder has died and relatives are not aware of its existence. When someone dies the executors or members of the family may not know that they had financial assets, or cannot trace them. These then become unclaimed assets.

2. The size of unclaimed assets

The funds of insurance companies with no owners are called "orphan" funds. For example the Investors Association discusses the fate of the orphan funds of the three British companies, Pearl, NPI, London Life when they were purchased by the Australian company AMP. Orphan funds arise from unclaimed policies and from surpluses not paid out as bonuses.

Orphan funds are estimated to total £ 45 billion. How much comes from unclaimed policies? Other unclaimed financial assets in, banks, building societies, shares, national savings, pension schemes, are estimated to be £ 14 billion, of which £ 5 billion is in dormant accounts. Thus total unclaimed assets and orphan funds is perhaps £ 60 billion.

3.1 Ensure the NI numbers of people who die are known to institutions.

The NI Office should send the NI numbers of people who die to institutions holding financial assets of the public such as banks, building societies, asset management companies and insurance companies. They should be required to keep a list of the NI numbers of their customers which hold these assets.

If contact has been lost when someone dies, executors or family can unfortunately not be traced through the Letter Forwarding Service of the DWP, because it does not send letters to the deceased. Perhaps this could be changed. A letter to the recently deceased would go to relatives, which would be a way of contacting them.

The Letter Forwarding Services might perhaps be extended by the creation of "A data base ('a central register') capable of covering all of the resident population of the UK" and "links between the central register and information held on other systems by service providers", which is proposed in the green paper of the Home Office Identity Cards and Identity Fraud (2002).

3.2 Put NI numbers on "products".

All working people have a National Insurance number. NI numbers are currently recorded for "products" of the financial services industry with "tax efficient" status. This includes TESSAS, PEPS, ISAS, personal and stakeholder pensions, occupational pensions, AVCs, and probably the new "Sandler suite" of products. But they are not generally recorded on insurance policies such as mortgage endowments and insurance bonds, or on bank or building society accounts, which may often be for quite small sums. NI numbers should arguably be on all the "products" of the financial services industry.

In some countries such as Sweden, identity numbers - used for tax/social security purposes - are given at birth. In the UK you wait until you get a job before having an NI number.

The Home Office has developed proposals for entitlement/identity cards. It also proposes new identity numbers and a central register of UK residents. At the time of writing (13th September 2003) it seems possible that only identity numbers and a central register will be introduced and not identity cards. The green paper of the DFES Every Child Matters (2003) proposes "a single unique identity number" for all children. The green paper of the Home Office mentioned above suggests that new identity numbers could be NI numbers.

4. Baby bonds should have identity numbers.

New Child Trust Funds popularly known as "baby bonds" were announced by the Chancellor in his 2003 Budget. It has not yet been decided how the money will be invested or who will be the trustees.

It is not possible to put NI numbers on baby bonds because babies do not have NI numbers. If an identity number is given at birth, this could be put on the bond. It should perhaps also be put on the birth certificate.