Inside Politics

House urged to review unclaimed assets law

Tuesday, November 17th, 2020 00:00 |
Unclaimed Financial Assets Authority chief executive John Mwangi (right) with director Thomas Mwadegu before Finance and National Planning Committee of the National Assembly. Photo/PD/SAMUEL KARIUKI

Lewis Njoka @LewisNjoka

Out of Sh16.1 billion held by the Unclaimed Financial Assets Authority (UFAA) last year, only Sh339.4 million was paid to claimants.

Additionally, the authority held Sh26.3 billion worth of unclaimed shares and a total of 1,592 unclaimed safe deposit boxes were being held in 2019.

Appearing before the Parliamentary Committee on Finance, Planning , UFAA chief executive, John Mwngi, attributed the low payout to lengthy claim procedures, which discourages most of the claimants from filing claims.

Over 90 per cent of the assets are below Sh5,000 in value, according to Mwangi, making it not financially viable to follow up the expensive claiming procedure.

“At a personal level the money is not a lot, but cumulatively, it’s a lot,” he said.

Mwangi called on Parliament to review the claim procedures to make it more attractive to low value claimants, who make up the majority of the unclaimed assets.

Review regulations

“We should review the regulations and differentiate the claimants by value so that the process for low value claimants is not the same as high value,” he said.

However, even the Sh339.4 million paid out in 2019 was an improvement compared to the previous year where the authority paid Sh95.2 million in claims out of a total recover of Sh13.5 billion recovered that year.

Some of the unclaimed assets, according to the authority, comprises monies such as uncollected deposits paid when bidding tenders, caution money paid is learning institutions and deposit paid to utility firms among others.

A study carried out by the authority last year revealed that holders are holding about Sh241 billion in unclaimed assets that is yet to be surrendered to the authority.

According to Mwangi unwillingness by the holding institutions to remit the money and lack of cash flow are the main reasons why the holders are yet to surrender the money to the institutions.

Gladys Wanga,the committee chair, promised to look into the request, adding that they were considering how to help the authority acquire more staff to fulfil its mandate.

The authority is only mandated to track and reunite financial assets with their rightful owners, not physical assets such as land and property.

During the meeting it emerged that this year, the authority has absorbed only Sh67 million out of the Sh1.07 billion approved budget due to the effects of Covid-19 pandemic on its programmes.

Last year, the authority spent Sh746 million to carry out its operations, 88 per cent of the approved budget last year.

The cash-rich authority made Sh1.4 billion in 2019 from investing the unclaimed assets in Treasury bills according to Mwangi.

However, the claimants are not entitled to income made from the unclaimed assets as per the law with the money surrendered to Treasury.

In 2018/2019 financial year, the authority made Sh1.2 billion in income from its investments in Treasury bills.

According to Mwangi, UFAA invests only in government securities, specifically, Treasury bills.

Reuniting beneficiaries

UFAA funds 75 per cent of its budget while the exchequer provides the remaining 25 per cent.

UFAA has been operational since 2015 and is charged with reuniting beneficiaries with unclaimed assets.

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