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

When my partner received a letter saying there was £5,000 worth 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 belongings,” the letter to Spencer said. It said he had not claimed dividends of £1,171, which the company wanted to refund to him by cheque. It also told him he had shares worth £4,342 that would remain invested.

We looked up 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 excitement. After buying a new house near Maidstone in Kent this year, the money would come in handy.

It turned out that 52-year-old Spencer had received 53 shares more than thirty years ago from his former employer, the East London brewery Bass Charrington, part of a group that would later become Intercontinental Hotel Group (IHG).

Over the years he had moved and not updated his contact information.

This happens often: shareholders often forget to notify the registrars when they move and their shares are lost.

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

About £2.8 billion of this lost fortune consists of investments and wealth funds. 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 set up with the intention of growing them for the future, but due to changing brands and lost paperwork, these are often forgotten over time.”

Most listed companies appoint a registrar who keeps their shareholder details up to date. 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 returned to sender by the address’s new residents, the registrar will stop sending checks and mark the account as “lost.” Steps may be necessary to find you through a search company, such as Pro Search in Spencer’s case.

We filled out Pro Search’s form and then excitedly waited for the check.

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

“Open it if you want,” he said. “Or save 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 fell when I saw the value of the check – for just £353. We had expected Pro Search to charge a fee for reuniting Spencer with his shares. Pro Search’s fees were in small print on the second page of the letter to Spencer. It said he would be charged a fee of 12.5 per cent of his dividend entitlement – ​​a figure of £146 – which we felt was reasonable for the service provided.

However, we stumbled over the complicated wording in the small print. It turned out that shareholders like Spencer who lose their share certificates have to pay 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 – which amounts to £636.

In addition, he had to pay two percent of the value of his shares for non-life insurance, which protects the company against the risk that Spencer is not the current shareholder.

Then the bitter icing on the cake: VAT of £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 any records of this.

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 investments, you should register for dividend payments to your bank account.

So even if you move 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 contact the registrar directly to claim their dividends and request a new share certificate.

We had decided not to go this route as we thought the administrative costs would be around £150, rather than £636.

If Spencer had contacted Equiniti directly, he would have been charged £235.50 for the same service. However, Equiniti says this could have been difficult to manage because Spencer had no evidence of living at the address where the shares were registered 30 years ago.

Laura Suter, personal finance director at investment platform AJ Bell, says: ‘It can be a pleasant surprise to be reminded of investments you’ve forgotten about. But be careful not to let an unexpected treat turn into a trick.

‘Always read the fine print and if in doubt, call the company that traced you to find out how much you can expect to get back. If the costs seem excessive, take some time to consider your options.”

Gretel’s Mr Stevens adds: ‘Do your homework online before dealing with an organization you don’t know, and check customer review sites to see if others have used them and what their experience was. You should never have to pay to get back money that is rightfully yours.”

So why did we have to pay so much?

Pro Search says the compensation reflects reuniting shareholders with cash dividends and share ownership that, if left unclaimed, could have been forfeited in the future.

The compensation is agreed by the company in which the shares are held and, according to Pro Search, may involve a detailed investigation.

As a gesture of goodwill, Equiniti says any new share ownership discovered for Spencer will be managed for free. IHG says it is investigating the matter.

• Have you had any problems recovering lost shares? Contact money@mailonsunday.co.uk