You could be paying be more than £400 in unnecessary fees by using specialist ‘share-tracing’ companies to reclaim lost assets, according to new research by Which? Money.
Firms appointed to track down missing shareholders (usually stemming from when companies merged or have been taken over) charge a range of fees to reunite you with dividends that you’re owed, when going direct to share registrars could see you paying less than a quarter of the cost.
Share-tracing firms typically charge between 8% and 15% of the value of your shares and the dividends you’re owed. If you had outstanding dividends of £1,000 and shares worth £4,000, it could cost you between £400 and £750 to reclaim your cash and shares.
However, going direct to share registrars to reclaim your shares could cost you between £92 and £141.
What are ‘share tracing’ companies?
Typically, when a takeover occurs, the company will outsource the effort involved in tracking down shareholders to a specialist tracing company to reunite them with their holdings. Santander, for example, appointed share-tracing firm Prosearch to reunite Abbey shareholders with their assets after its takeover of the bank in 2004.
These specialists are subsidiaries of the main share registrars: ProSearch is owned by Equiniti, Georgeson Asset Reunification is owned by Computershare and Capita Hartshead Tracing Solutions is owned by Capita.
Why are the fees to trace shares so high?
The specialist tracing firms say the reason fees are so high is because the process of reuniting shareholders with their assets is a lengthy and complicated one, particularly when the shareholder is deceased and their next of kin is being traced. Share registers passed on by companies are often in poor condition, and the identity of the shareholder must be verified.
Databases used by these specialists to search for people often charge a fee, and there may be issues and intricacies that need to be dealt with before funds can be paid out.
The firms charge between 8% and 15%, depending on the size and complexity of the project that they have been appointed to oversee.
How can I cut the cost of getting my assets back?
When you’re contacted by a share-tracing firm, you’re under no obligation to use its services. If you have been alerted to the fact that you have shares and dividends owed to you, you can cut the cost of reclaiming them by dealing directly with the parent-company share registrar.
First, find the name of the share registrar by calling the company. If you are told you have unclaimed BT shares, for example, call BT and ask them which registrar they use. You can then contact the share registrar directly. The cost of doing this is significantly lower.
In our scenario (reclaiming dividends of £1,000 and shares worth £4,000), Capita Hartshead would have charged between £500 and £750 to reunite you with your assets. Going direct to its parent company Capita would have cost just £92.
Should you avoid share-tracing firms?
These specialist companies can save you a lot of hassle, especially if you don’t have the time or inclination to call around yourself. And it could be argued that you are getting money back you never knew you had so paying a fee is not so much of a problem.
However, you could get significantly more back by putting in some effort to reclaim assets on your own.
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