Getting out of the woods on claims management
Have you ever wondered what happens to coupon or dividend income that is incorrectly paid and the rightful beneficiary cannot be found?
Every day, banks find themselves in this situation much more often than you might imagine. And for operations staff responsible for repatriating incorrectly received or unclaimed coupons and dividends for securities held on their books, it is a real burden.
Case in point: Abandoned property rules in the US
Tracking and reporting requirements related to claims can also be particularly challenging.
In the United States, for example, when a coupon or dividend goes unclaimed, the money owed eventually has to be paid to a state in a process known as “escheatment.”
Before the funds become the property of a state, however, regulations under abandoned property laws require banks to make a diligent effort to try and contact the rightful beneficiary. After a certain period of time – which varies from state to state – the unrepatriated funds are then paid to the state. In the meantime, to prove to regulatory authorities that they have undertaken all the necessary steps, banks are required to maintain an audit trail of their efforts to settle the outstanding claims.
For instance, in one state banks have to be able to prove that they have tried at least three times to contact the beneficiary by sending a communication to their last known address. The last attempt to contact the owner must also fall within 90 days of the state’s end period before escheatment takes place, which is three years in this scenario.
While SIFMA advocates for clearer and more harmonised rules governing unclaimed property, today every state has its own requirements that banks need to adhere to for finding and claiming unclaimed coupon and dividends. Add to this high volumes, periodic changes to the regulations and strict reporting requirements, and you can see how this becomes a complex and time-consuming exercise.
Easing your compliance
The good news is that help is now available in the form of our new SetClaim service.
SetClaim provides a global centralised hub through which any bank can manage – and automate – their claims processes. This has significant advantages in terms of increasing efficiency and resolution time, reducing operational costs and risks, and it can be used across all a bank’s counterparties regardless of their location.
Importantly, it also offers a ready-made audit trail of all claims activity to aid regulatory compliance – whether for proving attempts were made to pay unclaimed coupons and dividends, or for any other tracking and reporting requirements claims managers need to juggle.
When it comes to claims management, initiatives like SetClaim finally give banks a path out of the woods.
Getting ahead in claims management: Part One
In this first of a series of two webinars, speakers Angus Scott, Euroclear and Henry Napier, Bank of China/SIFMA share their expert views on the impact of claim management inefficiencies, regulatory pressures to get claims management right and ways to move your firm ahead.
Tackling the final frontier of back office automation
It is time for banks to rise to the challenge and deal with the one glaring gap in their back-office STP processes: claims management. Euroclear's Angus Scott explains.
Angus Scott has over twenty years experience in capital markets infrastructure and securities services, specialising in strategy and strategic change management. As Head of Product Strategy and Innovation at Euroclear Group, he is responsible for creating and delivering a portfolio of new, commercially viable product opportunities that support Euroclear's strategic agenda.