How a tracing firm turned lost share dividends from £1,171 to just £353.52

When my partner received a letter telling him there was £5,000 of long-lost shares and dividends waiting for him to claim, we assumed it was a scam.

Windfalls are so rare – it felt too good to be true. ‘IHG wants to reunite you with your lost assets,’ the letter to Spencer read. It stated he had unclaimed dividends of £1,171 which the company wanted to return to him by cheque. It also told him that he had shares worth £4,342 which would remain invested.

We looked up the name of the sender online, a company called Pro Search.

It turned out that this is a legitimate firm that tracks down individual shareholders on behalf of other companies. The letter was not a scam. Our scepticism turned to excitement. Having bought a new house near Maidstone in Kent this year, the money would come in handy.

It turned out that more than 30 years ago Spencer, 52, had been given 53 shares by his former employer, East London brewery Bass Charrington, part of a concern that would later become Intercontinental Hotel Group (IHG).

Over the years he had moved home and failed to update his contact details.

This happens frequently – shareholders often forget to tell registrars when they move and their shares go missing.

Households have lost track of financial products worth more than £89billion, says Gretel, a free dormant account finding service.

Some £2.8billion of this lost fortune is investments and wealth funds. The average lost investment account is worth £2,800.

Duncan Stevens, chief executive of Gretel, says: ‘Many people lose track of their investments due to changes in jobs, moving home or losing touch with a financial adviser.

Shares, Isas and other long-term investments are often set up with the intention of leaving them to grow for the future, but changing brands and lost paperwork mean these often become forgotten over time.’

Most companies listed on the stock exchange appoint a registrar to keep up-to-date records of their shareholders. The registrar is also responsible for sending all correspondence to shareholders such as the company’s annual report.

If dividend cheques go uncashed or are returned to the sender by the new occupiers of the address, the registrar stops sending cheques and marks the account as ‘gone away’. It may take steps to find you using a tracing company, such as Pro Search in Spencer’s case.

We filled out the form from Pro Search and then waited excitedly for the cheque to arrive.

Weeks later when another letter arrived for Spencer, I called him at work to say I thought the cheque was finally here.

‘Open it if you like,’ he said. ‘Or keep it as a surprise for me when I get home.’ I decided to wait.

It was a surprise, and not a good one. My face dropped when I saw the value of the cheque – for just £353. We had expected Pro Search to charge a fee for reuniting Spencer with his shares. Pro Search’s fees were buried in small print on the second page of the letter sent to Spencer. It said a fee of 12.5 per cent of his dividend entitlement would be charged – amounting to £146 – which we felt was reasonable for the service it provided.

However, we were tripped up by the complicated wording in the small print. It turned out that shareholders such as Spencer who lose their share certificate are charged much more.

In his case, the 12.5 per cent administrative charge would be based on the total combined value of his dividends and shares – amounting to £636.

On top, he was charged two per cent of the value of his shares for indemnity insurance, which protects the company against the risk that Spencer is not the current shareholder.

Then the bitter icing on the cake – VAT at £143.

How to bring your cost down

If you think you have lost shares, you can contact the three main registrars to see if they have details for them.

These are Equiniti, Computershare and MUFG Pension & Market Services, formerly Link Market Services. In our case, Equiniti is the registrar for Intercontinental Hotel Group (IHG) and part of the Equiniti Group which also owns Pro Search.

To reduce the risk of losing track of holdings, you should register for dividends to be paid into your bank account.

Thus, even if you do move house and forget to notify the registrar, at least you will still receive your payments.

Pro Search explains that its tracing service is voluntary.

Shareholders are free to deal directly with the registrar to claim their dividends and request a new share certificate.

We had decided not to go down this route because we believed the administrative charge would be around £150, rather than £636.

If Spencer had contacted Equiniti directly, he would have been charged £235.50 for the same service. Equiniti says this may have been difficult to administer, however, as Spencer did not have any proof that he had lived at the address where the shares were registered to 30 years ago.

Laura Suter, personal finance director for investment platform AJ Bell, says: ‘It could be a pleasant surprise if you’re reminded of investments you’ve forgotten. But be careful that unexpected treat doesn’t turn into a trick.

‘Always read the small print and, if unsure, call the company that has traced you to ask how much you can expect to get back. If the fees seem excessive, take a moment to consider your options.’

Mr Stevens of Gretel adds: ‘Do your homework online before dealing with any organisation you do not know and check customer review sites to see if others have used them and what their experience was like. You should never have to pay to recover money that’s rightfully yours.’

So why were we charged this much?

Pro Search says its fee reflects reuniting shareholders with cash dividends and the shareholding which, if it had continued to be unclaimed, could have been forfeited in the future.

Its fee is agreed by the company in which shares are held and according to Pro Search can involve a detailed investigation.

As a gesture of goodwill, Equiniti says any further shareholding uncovered for Spencer would be administered free of charge. IHG says it is looking into the matter.

• Have you had problems reclaiming lost shares? Please contact money@mailonsunday.co.uk