An estimated R88.56 billion in unclaimed assets are held by institutions across the financial sector. However, the FSCA says the amount might be far higher because there is no common understanding of what an unclaimed asset is, and reliable data is lacking.
According to the FSCA’s discussion paper on unclaimed benefits, data about dormant accounts and unclaimed assets is most reliable with respect to retirement funds and members of the Association for Savings and Investment South Africa (Asisa), where specific reporting requirements and accepted industry practices exist. This is probably the reason for the higher levels of unclaimed assets reported by these sectors.
Read: FSCA proposes a central fund to tackle R88bn in unclaimed assets
More than half (53%) the unclaimed assets are held by the retirement industry. At the end of 2020, 1 306 retirement funds held unclaimed benefits of R47.2bn on behalf of 4.45 million members and beneficiaries.
This figure should be put in context: less than 2% of all retirement assets are unclaimed.
The paper also pointed out that the increase in the value of unclaimed benefits was not only because of an increase in the number of unclaimed benefits, but also because of the investment income earned.
Despite the increase in the value of unclaimed retirement benefits, the number of members with unclaimed benefits have declined since 2018, mainly because of tracing efforts by occupational funds, the paper said.
Almost 42% of beneficiaries have a claim of between R10 000 and R50 000, while 18.5% of beneficiaries of have a claim of R1 000 or less.
Most unclaimed retirement assets are in occupational funds: R37bn was due to 3.45 million members in 2020. Unclaimed benefit funds held R10.2bn due to 990 640 members.
About 60% of unclaimed benefits in occupational funds are in respect of former employees who belonged to funds related to the mining, motor, metal and engineering industries.
There was a significant increase in unclaimed benefits in occupational funds in 2014. This was mainly because two large funds changed their accounting policies in 2013, resulting in the reclassification of R11bn as unclaimed benefits in the following year.
Changes to the unclaimed benefit definition in 2014 resulted in additional benefits being classified as unclaimed in 2015. The new definition included a death benefit payable to a beneficiary and any amount that remained unclaimed or unpaid to a non-member spouse within 24 months from the date when the last deductions were made.
Asisa members
Life insurers and collective investment schemes have R33.5bn (38%) in unclaimed benefits and dormant accounts.
The total value of unclaimed assets as a percentage of the total value of assets under management by Asisa members in 2021 was about 0.5%.
Asisa members united beneficial owners with unclaimed assets worth R22.66bn in 2021; at the time this was about 40% of the unclaimed asset value.
Lack of data from the banks
Data on unclaimed assets and dormant or lost accounts in the banking sector is restricted to information on dormant retail transaction accounts. The FSCA also has no data on unclaimed assets that may be in non-bank transaction accounts and payment wallets.
In 2021, it was estimated there was R3.6bn in 5.7 million dormant retail transactional accounts. But this figure was in respect of only five banks.
According to the paper, the banking sector is lagging other product providers when it comes to identifying and tracing unclaimed assets.
“Part of the challenge may be increased complexity for the banks relating to the volumes of accounts in general and the common practice by accountholders of allowing accounts to become dormant rather than closing them when no longer required or used.”
R4.5bn in unclaimed dividends
Central securities depository firms such as Strate hold 5% (R4.5bn) of the total unclaimed assets, in the form of unclaimed dividends.
The paper said dividends are not claimed because of limited or outdated information about the owners or holders of securities.
Typically, shareholders do not have a direct relationship with a Central Securities Depository Participant or the issuer of securities, which processes dividend transfers.
In many cases, when shareholders die, their shareholding is not included in their estates, resulting in the executor not being aware of the shareholding.
Are financial institutions doing enough?
The paper said the question of whether financial institutions are making the best effort to reunite unclaimed assets with beneficial owners cannot, based on the current lack of data, be answered.
The FSCA is, therefore, proposing that financial institutions must keep records of identified dormant and unclaimed assets, including the number of accounts and beneficial owners, asset type, individual asset value, age of asset, age and race of a beneficial owner, how the institution has responded to tracing beneficial owners, and the effectiveness of such responses. These records should routinely be reported on to the FSCA in a standardised manner and form.
Poor record-keeping is the main problem
The paper said the reasons for the nature and extent of unclaimed assets and dormant accounts vary by sector. However, the most common reasons are inadequate record-keeping by financial institutions and intermediaries, as well as neglect by asset owners to keep their records up to date.
Financial institutions, in some instances, depend on information provided by the party responsible for client onboarding (for example, intermediaries, employers, administrators), and challenges are compounded by transfers of assets and changes in intermediaries and administrators.
Additional challenges relate to inconsistent identification and reporting of unclaimed assets and dormant or lost accounts, due to changing and inconsistently applied definitions.
Lastly, there are no norms for tracing of account holders or asset owners.
I tried claiming on behalf of a client. I search the FSCA site and a positive identification was made. I ried contacting the Fund and after 6 months thy responded and asked me for a payslip of the claimant who left the fund +/- 20 years ago. The time the fund also closed. I could not provide a payslip only a positive ID, and a positive Fund, that respond to the search and the specific fund. I just can not find an answer no reply to mails and it is pointless to phone. This is an problem and not solvable.
I sold a property in Simbithi Eco estate in 2011.
Mortgage was through Standard bank.
Purchase price was R1,925,000 sale price R2,800,000.
I have been abroad for the past 19 years and can not remember which Bank I had an account with to where the net sales proceeds would have been deposited
How can I track a bank account after 12 years?
Since CGT was declarable on the transaction, I suggest you contact Sars and find out whether they have a record of this.
I’m trying to trace unclaimed funds and property that my late mother left for me at the banking sector. I’m not sure how to go about it since the email addresses I get return the undeliverable messages.
We are trying to claim the money that my father was saving for me and my siblings. It was the times where blue cards (std bank) were used. He saved money fortnightly for all siblings, however, we do not know how to start or where to even begin searching?
I am trying to locate money to me left by and old friend approx 15 years ago filled and signed forms fnb and said he would be leaving to me lost contact