New rules likely for distributing unclaimed millions from funds

The Guernsey Financial Services Commission conducted a thematic review on the issue earlier this year and a majority of industry has agreed that enhanced guidance would be helpful.

The commission said it carried out the review to prevent issues in the future.

The net asset value of all Guernsey schemes was more than £290bn, and the total value of unclaimed monies was £16.6m.

‘While in proportion the figure seems low, it is important to consider it from an investor’s perspective – it will not be small for the individual investors, some of whom will be retail.’

Unclaimed monies are sitting in 11.5% of older, open-ended funds, and only 2% of closed-ended schemes – a total of 38 schemes, all bar one of which were authorised before 2017.

The review found that there was no clear and consistent approach taken towards unclaimed monies. Consensus was that having clear provisions within the scheme particulars, covering all scenarios of unclaimed monies, would provide a ‘solid defendable ground’ for relevant parties and a quicker solution to deal with the issue.

More than 40 administrators were questioned, all responded. Eleven said they acted for schemes with unclaimed monies. In most cases the issues involved outstanding customer due diligence information, or that they had lost contact with investors.

Several areas of good practice were identified in the review, with some red flags also witnessed.

Eight of the 11 said they would welcome more formal industry standard or guidance on the issue.

The commission will now consider issuing a consultation and taking further action, in line with the IOSCO report on good practices for the termination of investment funds.