Build, Buy or Outsource: Tax Reclaims and Class Action Recovery

class recovery

This article is sponsored by Goal Group.

Written by Bill Salva and Noah Wortman

The arguments in favor of outsourcing or buying a commercial enterprise solution from a qualified Tax Reclaim and Securities Class Action Recovery provider are compelling. One common guideline applied by many for this decision is to buy or outsource when you need to automate a commodity business process, and to build only when you’re addressing a core process that differentiates your company. The reality for most financial service firms is that Tax Reclaims and Securities Class Recovery processing is rarely considered a core business process, no matter how much many of us in the recovery business like to think it is. That said, banks, brokers and other financial institutions that provide securities trust, custody and related services for clients often have an obligation to perform these services either under local fiduciary standards, regulations or customer service level agreements. The fact is that many organizations have been forced to recognize this obligation by either their regulators or their clients and have had to decide whether to build, buy or outsource.

Tax Reclaims

The business of filing tax reclaims is not rocket science. However like rockets themselves, it has many moving pieces that require constant vigilance and attention to detail. The technology platforms that support tax reclaims need to have the functionality to account for and manage changes over time in many details such as investor tax status, income types, tax rates, filing regulations, reclaim forms, tax treaties, and other requirements imposed by various actors in the value chain.

The main problem with tax reclaim systems built in-house is that they require constant business-rule updates and upgrades to accommodate new markets, regulations, and other modifications. Keeping these systems up to date requires a commitment to sufficient resources, including expert staff and/or access to professional advisory services that many organizations overlook or under estimate. As with other in-house built solutions, the classic issues also often arise including; such systems usually cost more to develop than to buy when all costs are factored in; requirements, design and development expertise are often hard to find and keep; and internal competition for limited resources constantly threatens an in-house system’s viability.

Buy an Off-the-Shelf Solution

A tax reclaim solution from a qualified provider offers a myriad of benefits. Since a truly qualified and experienced provider will have been in this business for decades and provides its solution to many firms, the solution will likely have all the needed functionality built-in. An off-the shelf solution can also be deployed much more quickly and at a lower cost. The best providers also include business-rule maintenance that provides timely upgrades and updates. It just doesn’t make sense to “reinvent the wheel” when it comes to the right choice for a tax reclaim solution.


For many firms an outsourcing model makes even more sense. As noted above, it’s clear that an off-the-shelf solution is preferable to building one in-house. However, it still requires firms to hire, train, and keep qualified staff to manage and perform all operational activities. These are not insignificant challenges for many firms due to budget constraints and shortages of qualified staff. On the other hand, outsourcing enables a firm to provide clients a world-class tax reclaim service in the shortest amount of time, at the lowest possible start-up cost and without having to staff up and support another operations team.

Securities Class Actions Recovery

When a securities class action settlement is announced, the terms under which a class member can claim a loss and seek recovery under a settlement agreement can vary substantially from case-to-case. In general, the purchases, sales and certain other trading activity in publicly traded securities of potential class members need to be evaluated to determine whether they qualify to lodge a claim, and each court approved settlement administrator has its own defined terms, manner and timing required to lodge valid claims. Moreover, the U.S. is no longer the only country for which there may be an option to pursue recovery, and each global jurisdiction brings its own set of rules and procedures to participate in class actions. This analysis is complicated and not for the faint of heart and should probably be left to the experts.

Here, the choice is whether a firm should do it themselves or outsource. An in-house solution primarily requires the development of internal expertise in the mechanics of class actions litigations and nowadays, even more so, given its ever growing global phenomenon. As with tax reclaims, qualified class actions staff are difficult to find and retain, and it is often difficult to justify dedicated staff and technology resources to securities class action activities. Like tax reclaim outsourcing discussed above, outsourcing securities class action monitoring and recoveries to a qualified, experienced provider is arguably the best way for a firm to offer securities class action recovery services to clients at the lowest possible cost.

About Goal Group
Goal Group is the world’s leading class actions and tax reclamation services specialist. With headquarters in London and offices in Philadelphia, San Francisco, Melbourne and Hong Kong, Goal Group monitors client assets with a total value in excess of £8 trillion. It has a truly blue-chip client base including many of the world’s largest global custodians, asset managers, private banks, pension funds, local government authorities, hedge funds, investment banks, prime brokers, and fund managers spread widely across the Americas, EMEA and Asia Pacific.

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