The Use of Personal Identity Numbers to
Keep Track of Customers and Investments

Further relevant articles on this website

1. Introduction

There is a campaign to distribute unclaimed assets in financial companies to charity. ^x A new organisation known as The Balance Foundation for Unclaimed Assets ^x has recently been established for this purpose. "Blair presses banks on dormant accounts." ^x "Deprived areas bank on help at last" ^x "Brown preparing to raid banks for 'dormant' £4bn." ^x says:

"The Government has already indicated the need for a national register to provide individuals with a means to find funds."

In the first instance the funds should be finding individuals rather than individuals finding funds. The expected establishment of a Population Register ^x seems to give an opportunity to prevent the loss of investments in the first place. An example of a dormant account is:

"Money Box listener Ken had more than £3000 in a 30 day notice account at a High Street bank. He found it had become dormant when he went in to make a withdrawal. And it was several weeks before he got it back. He worries that his family might never have got the money if he had died before sorting it out." ^x

The FSA defines a dormant account:

"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'." ^x

The bank or building society could enquire at the Letter Forwarding Service of the DWP. ^x In the Money Box programme, Joanna Elson, of the British Bankers' Association:

"denied that banks were not taking enough action ... banks make efforts to contact the customer."

Cannot people be traced simply through the Letter Forwarding Service? This says that National Insurance numbers are very useful information. If NI numbers - or the proposed new identity numbers - were on all financial "products" this would help trace customers of the industry through the Letter Forwarding Service or perhaps the proposed Population Register.

2. The Population Register

The government is planning to introduce personal identity numbers ^x or "national identity reference numbers". The new identity numbers will probably supersede NI and NHS numbers. Identity numbers will be assigned at birth, whereas NI numbers are assigned when you first get a job.

Two new national registers are proposed: a "Population Register", and a "National Identity Register". The purpose of the Population Register is "raising the quality of basic contact data" - knowing people's whereabouts. ^x The second register is concerned with identity, in conjunction with the introduction of identity cards. ^x

It seems from the website of the Office for National Statistics that the information on the Population Register is only for the use of the public sector - "government departments and agencies". Such as:

"Records held by the public sector become out of date, as people do not always notify each relevant department when moving house or changing name. This means that individuals do not always receive the information or services they are entitled to, and leads to the Government wasting resources due to failed contacts." ^x

Surely the Population Register could also be useful for the private sector? Restricting access to the register to government departments and agencies, seems likely to lead to demarcation problems. A local authority is a government agency. A local authority pension scheme is not a government agency. The pension scheme is likely to be given access to the register through the local authority. Then another pension scheme which does not have access may complain that it is at a disadvantage.

You can find financial companies using "firm reference numbers" on register on the FSA website. ^x The Population Register could perhaps develop a similar register for people - an internet system so that people can be traced by specifying their identity number. Anyone who does not want to be traced in this way should have the option of being ex-directory, and the Population Register could provide a letter forwarding service for them instead.

Such a system would help financial companies keep in contact with their customers more directly than the Letter Forwarding Service of the DWP. Perhaps some of the funds in dormant accounts could be used for the development of the system, if cost is an issue. This would be a fairer use of these funds than giving them to charity.

3. Keeping the industry in contact with customers

Suppose a company has lost contact with a customer but knows their identity number, they could then find their whereabouts from the Population Register. Financial companies such as insurance companies and banks should be required to keep a list of the identity numbers of their customers who are investors.

They might have lost contact without realising it. Contact with customers may be lost especially when they move house or die.

"NS&I has found that one in seven people who moved house in the last 12 months had forgotten to tell all of their financial providers their new address." ^x

Perhaps the Population Register should send, at regular intervals, the identity numbers of people who move house or die to companies in the financial industry looking after savings. "Consumer awareness" is an objective of the FSA under the Financial Services Act (2000). What about "industry awareness"? The industry should know the whereabouts of their customers and when they die. Accounts may remain unclaimed because they are kept secret from relatives. ^x

The Minister Ruth Kelly discussed the dormant holdings of National Savings and Investments:

"Given current IT capability, it is not yet possible to define and precisely quantify dormant holdings because the nature of some NS&I products means there may not be any contact with the holder for many years but the holding is still alive."

In the above example the bank did not wait for many years before classifying the account as "dormant". If the bank has Ken's NI number and is notified of the NI numbers of people who die, then if he dies his family would get his money back - all being well.

An NS&I form "application to open a deposit account" ^x does not ask for an NI number. Nor does their form "request to trace dormant savings or investments". ^x On the form "application to open TESSA ISA" ^x the NI number is described as "essential".

I understand that the Letter Forwarding Service "only forwards letters to the living", so I am not sure of the extent to which it is currently used to contact relatives of the deceased.

4. Confusing numbers for investors

Looking at the documentation for a small number of PEPS, TESSAs and ISAs, there is: "account number", "plan number", "contract number", "reference number", "your reference number", "client reference number", "your client reference number", "your TESSA number", "ISA account number", "PEP plan number", "customer reference number".

There are several changes of "account number" and a change from "account number" to "your reference number" and from "Account Number" to "Client Number". (These terms may start with capital letters.) Funds and companies sometimes change their name, as the result of mergers and demergers. You thought you had chosen company A only to find there is a metamorphasis into company B. This makes it easy to lose investments.

I did not see an NI number on the documentation mentioned above. NI numbers should be put on policy documents, bank accounts etc. Evan Owen who is an IFA ( website ^x ), agrees that "NI numbers should be attached to any investment product". He has kindly 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 concerned. I believe that NI numbers should be attached to any investment product."

"Tax efficient status" implies that the company is in contact with the Inland Revenue about these "products". Evan Owen explains:

"The Inland Revenue keep tabs on how many such products an individual has purchased, their unit in Bootle often tells product providers to repay pension contributions or cancel PEPs and ISAs because someone has exceeded their 'allowance'. Endowments, investment bonds, unit trusts, term assurance and annuities don't fall into that category."

Application forms for different kinds of "products" can be downloaded from the web, to check whether or not they request NI numbers. For example an ISA ^x and a stakeholder pension ^x do. A bank account ^x savings account ^x and investment bond ^x do not. The forms I have seen for opening building society and bank accounts do not request NI numbers. An article on unclaimed assets by Liz Dolan in The Sunday Telegraph ^x found:

"The building societies were fairly forthcoming, but the banks were very guarded, very unco-operative."

5. The quantity of unclaimed assets

The Unclaimed Assets Register ^x estimates that total unclaimed financial assets in the UK are £ 15.3 billion: ^x

Asset	£ billion
Life Policies	1
Pensions	3
Shares and Dividends	3
Dormant Accounts	5
National Savings	3
Lotteries and other	0.3
Total	15.3

The £ 1 billion for life policies is surely an under-estimate. In the US according to the missing assets website: ^x

"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." ^x

In an article in the Guardian, Jill Treanor says that "Prudential alone has unclaimed assets of £10 bn" ^x. The life assurance industry apparently distinguishes between between "unclaimed assets" and "orphan funds" which are funds arising from under-declaration of bonuses. Much of the £10 bn in unclaimed assets could be orphan funds in this sense. Total unclaimed financial assets were recently estimated to amount to £50 billion. ^{x x}

The estimate of £1 billion for unclaimed life policies by the Unclaimed Assets Register is not credible, when for example the value of unclaimed National Lottery prizes is reported to be £ 575 million. ^x Such a low estimate by the UAR for unclaimed life policies suggests that it has only a small proportion of unclaimed policies on its register.

6. Conclusion

Ruth Kelly in the above quotation said "given current IT capability". But IT capability is rapidly expanding. The average personal computer can hold all addresses and reference numbers for everyone in the UK. It seems entirely possible to develop systems so that the industry does not lose contact with its customers.

I agree with Martyn Jones MP quoted in the Money Box programme above, that there needs to be legislation, with procedures to be followed when a financial company loses contact with a customer - such as a legal obligation to contact the Population Register.