How a tracking company turned lost share dividends from £1,171 to just £353.52

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

Windfalls are very rare; It seemed too good to be true. “IHG wants to reunite you with your lost assets,” the letter to Spencer said. He declared that he had unclaimed dividends of £1,171 which the company wanted to return to him by cheque. He also told him he had shares worth £4,342 which would remain invested.

We searched for the sender’s name online, a company called Pro Search.

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

It turned out that more than 30 years ago Spencer, 52, had received 53 shares in his former employer, the Bass Charrington brewery in east London, part of a company that later became Intercontinental Hotel Group (IHG).

Over the years, he moved home and did not update his contact details.

This happens frequently: shareholders often forget to inform registrars when they move and their shares disappear.

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

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

Duncan Stevens, CEO of Gretel, says: ‘Many people lose track of their investments due to job changes, moving or losing contact with a financial advisor.

Shares, Isas and other long-term investments are often created with the intention of letting them grow for the future, but rebranding and lost paperwork mean they are often forgotten over time.

Most listed companies appoint a registrar to maintain 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 checks are not cashed or are returned to the sender by the new occupants of the address, the registrar stops sending checks and marks the account as “missing.” Steps may need to be taken to find it using a tracking company, such as Pro Search in Spencer’s case.

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

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

“Open it if you want,” he said. Or leave it for me as a surprise 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 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. He said he would be charged a fee of 12.5 per cent of his dividend entitlement (amounting to £146), which we considered reasonable for the service he provided.

However, we were surprised by the complicated wording of the fine print. It turns out that shareholders like Spencer who lose their stock certificate are charged much more.

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

In addition, he was charged two percent 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 reduce your costs

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

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

To reduce the risk of losing track of your holdings, you should register to receive dividends in your bank account.

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

Pro Search explains that its tracking service is voluntary.

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

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

If Spencer had contacted Equiniti directly, she would have been charged £235.50 for the same service. Equiniti says this may have been difficult to manage, however, since Spencer had no proof that he had lived at the address where the shares were registered 30 years ago.

Laura Suter, head of personal finance at investment platform AJ Bell, says: “It could be a pleasant surprise if you remember investments you’ve forgotten.” But be careful that an unexpected gift does not turn into a trick.

‘Always read the fine print and if you are unsure, call the company that located you to ask how much you can expect to recover. If the fees seem excessive, take a moment to consider your options.

Gretel’s Mr Stevens adds: ‘Do your homework online before dealing with any organization you don’t 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 get money back that is rightfully yours.’

So why did they charge us so much?

Pro Search says its fee reflects the reunification of shareholders with cash dividends and participation that, if unclaimed, could have been lost in the future.

Your fee is agreed upon by the company in which the shares are held and, according to Pro Search, may involve detailed research.

As a gesture of goodwill, Equiniti says any additional holdings discovered for Spencer would be administered free of charge. IHG says it is investigating the matter.

• Have you had trouble recovering lost shares? Please contact money@mailonsunday.co.uk