Tracing a client - what's reasonable?

Tracing clients is costly, difficult to operationalise, and in some cases a legal minefield. We give our take on some of the key considerations for firms looking to take on the challenge themselves in order to track down their gone-away population.

Regulatory Backdrop

With regards to a firm's tracing requirements, CASS states that prior to paying away client money to a charity, a firm must demonstrate (CASS 7.11.50) "it has taken reasonable steps to trace the client concerned and to return the balance." It further goes on to say (CASS 7.11.52) that;

"a firm may use any available means to determine the correct contact details for the relevant client, including telephoning the client, searching internal records, media advertising, searching public records, morality screening, using credit reference agencies or tracing agents."

So it's a pretty healthy list of options. But how to go about choosing what is reasonable and staying the right side of the FCA's expectations without being overly cautious?

One way would be to tier the tracing methods used depending on the value in the account. Current CASS rules do not indicate whether any such tiering would be acceptable, and this was picked up in The Investment Association's response to the CP23/12 consultation titled "Expansion of the Dormant Assets Scheme - Second Phase". Here they state;

"Finally, a de-minimis value should be considered to reduce the tracing requirements for small amounts such as those less than £1."

We at Cleardown Solutions endorse the proposal to state a de-minimis value in relation to tracing requirements, and do apply a tiered approach to tracing requirements within our services.

Tracing Options

Lets look a little more at the options explicitly referred to within CASS.

1. Telephoning the client - It's a simple approach, however clients may have changed their telephone number, they may not pick up, or they may not appreciate a call out of the blue. Assuming you don't have a call centre set up then it may also be a costly endeavour for your firm.

2. Searching internal records - Under GDPR's "Accuracy" Principle, then your firm is expected to be keeping your client's data up-to-date, therefore ideally it shouldn't take another sweep of your internal records to pick up a more current address. However, it's an exercise worth undertaking, and may unearth plausible alternatives to be investigated further.

3. Media advertising - It's not only the nationwide firms that should consider media advertising. If you have a concentration of clients within reach of a media outlet, then using it could be a cost effective approach to getting the message out.

4. Searching public records - Searching the internet for information may give an indication of a new communication channel, however be sure to treat all information with caution and to verify the trace. You or a tracing agent (see below) may have the means to utilise commercial tracing services such as the Electoral Roll, Royal Mail services and Department of Work and Pensions.

5. Morality screening - Checking against Government death records to detect whether a client is deceased, and where relevant identifying the appropriate solicitor or executor details.

6. Using credit reference agencies - The three credit reference agencies in the UK do have services that you may utilise to identify your clients.

7. Using tracing agents - For small firms, that may not have regular access to the public records described above, then using a tracing agent can be beneficial. However their high costs can be inhibitive.

Final Word

However you may wish to trace your clients then ensure it is done in a way that respects their statutory rights. The means above are all good methods to do that, though operating them individually can be expensive, and if you're working to a budget then you won't have as many tracing options available to you when compared to using a firm like Cleardown Solutions. Tracing is built into our operational model and we continue to drive down costs for firms and enhance outcomes for clients.

If you want to discuss an aspect of this blog post, our services, or any other related queries, then please contact us and we will be happy to help.