The Commission estimates up to £400-£500 million of ‘dormant’ assets with the potential to be transferred to the Dormant Assets Scheme are sitting unclaimed by customers in the insurance and pensions sector. The Commission also expects a further £40-£50 million to become available for potential distribution to good causes on an ongoing annual basis.
Niamh Carr, Senior Consultant at Willis Towers Watson, said: “Overall, we see this as a positive step for the industry. The recommendations provide greater clarity to companies as to what they can do with dormant or unclaimed assets. There may also be positive publicity benefits as more customers are reunited with “lost” assets and unclaimed funds are donated to charitable causes.”
Industry feedback to the Commission included the view that the term dormancy was not useful in relation to insurance and pensions assets. Instead, “unclaimed assets” or “gone-aways” were suggested as more appropriate alternatives. Similarly, Willis Towers Watson notes that it may be difficult to achieve a consistent definition of dormancy across the industry due to differing product features and level of information held on customers by companies.
“The level of tracing activity currently varies across companies, so more actively managing this issue is likely to lead to additional costs”, said Niamh Carr. “However, proactively tracking customers should become less challenging as firms get better at utilising big data and obtaining new sources of data, which could also result in greater levels of engagement with customers.”
The report suggests that a number of products should be excluded from the scheme. For many companies, in particular those with high levels of industrial branch business, Willis Towers Watson expects a significant number of unclaimed assets would remain as it could be very difficult to identify when the policies became dormant and to quantify their value. With-profit funds and mutual societies would also be excluded due to the pooled nature of the assets.
The voluntary nature of the scheme is likely to help companies that are in a position to decide whether it would be beneficial and cost effective to transfer the assets, according to Willis Towers Watson. However, the consultancy suggests that an individual firm may feel under pressure to participate if many of its peer companies also take part.
To download the report from the Dormant Assets Commission please click here
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