Nearly £20bn of pension pots could remain unclaimed, according to recent research by the Pensions Policy Institute and Association of British Insurers. The research found a whopping 800,000 of ‘lost pensions’ – pensions held for ‘gone away’ customers or clients whom organisations have lost contact with and cannot find, often because they have not informed them of a change of address or change in contact details.
The increasing issue is likely to partially be due to the increasing trend for people to change jobs more often during their lifetime, so gaining multiple pensions. In addition, the Office of National Statistics said that since the Government’s introduction of automatic enrolment into pensions in October 2012, the 'employee workplace pension scheme membership has increased to 73 per cent in 2017, from 67 per cent in 2016'.
An issue across the financial services sector
Gone away clients don’t only impact pension providers. Investment managers, wealth managers, and other financial services firms often experience a significant number of gone away clients, whom they hold assets for.
These assets can vary from pennies to thousands of pounds and bring a variety of regulatory, legislative and commercial risks.
What risks do gone away clients bring?
If not managed effectively, gone away clients can bring a myriad of commercial, regulatory and legislative risks for financial services firms, including:
- inability to communicate important changes to terms and conditions or charges to clients, potentially leading to issues with treating clients fairly;
- failure to meet GDPR requirements, which can result in penalties of up to 4 per cent of global turnover;
- inadequate or inaccurate client data on file, risking non-compliance with Anti Money Laundering regulations and sanctions from the Financial Conduct Authority;
- increased risk of client fraud;
- large amounts of client assets remaining in dormant accounts, which can lead to issues with compliance to Dormant Asset Legislation; and
- commercial opportunities to re-engage clients to reinvest are missed.
It is important that financial services firms effectively manage gone away clients to reduce risk, ensure regulatory compliance, and realise commercial opportunities.
Download our brochure or contact Paul Jennings, Head of Financial Service Regulation and Compliance, David Fenton, Head of Financial Services or Ian Bell, Head of Pensions, to find out how RSM can help you trace and reconnect with gone away clients.