NS&I set to fork out millions over huge missing savings scandal
National Savings and Investments (NS&I) is set to fork out millions of pounds to customers following a missing savings scandal.
The government-backed bank is expected to pay out to customers who claim there have been failures in managing their money, with failings dating back years, according to reports in The Telegraph.
The bank has been accused of a series of errors, with some bereaved families claiming they did not receive money that was rightfully theirs and were forced to call in lawyers to claw back their cash.
The exact amount of money to be returned is yet to be determined, with Treasury officials understood to be working with NS&I on the finer points of a “very complex issue”, but it is expected to reach into the hundred of millions and potentially hit a staggering £400m.
It is expected to be the single biggest payout in the history of the institution which has been in operation for 160 years.
Funding failures
The Treasury-backed vehicle, which holds around £250bn for more than 26m British savers, offers both traditional interest-earning accounts and the chance to win tax-free prizes through its Premium Bonds.
It introduced Premium Bonds in 1956, and rebranded from Post Office Savings Bank to NS&I in 2002.
But the body has been hit with a storm of complaints in the last year as controversy swelled over its poor customer service for bereaved savers. Some saving customers at the NS&I have been forced to pay fines to the HMRC following receiving incorrect information from call handlers.
Meanwhile, some have missed out on home purchases and claim to have been denied thousands in lost interest due to delays in the money of deceased family members being released.
An NS&I spokesperson said on Wednesday: “We recognise that dealing with bereavement can be challenging and would like to apologise to anyone who has not received the customer service from NS&I that they should expect, particularly at such a sensitive time.”
Pensions minister Torsten Bell is expected to address the issue, which affected 37,000 customers, in the House of Commons on Thursday, and is reportedly furious at how chronic failures reached this point.
The minister is also likely to face questions surrounding whether taxpayers could be responsible for footing the bill.
Answering failures
From April the bank is set to drop the prize fund rate from 3.6 per cent to 3.3 per cent, leading to a drop in the number of prizes as well as making it ultimately harder to win.
Chancellor Rachel Reeves is now being urged to come clean over the scandal.
Mel Stride, the shadow chancellor, told The Telegraph: “Hard-working taxpayers could be asked to pick up the bill for what appears to be a staggering failure of oversight. The idea that £400m of taxpayers’ cash may now be needed to put right years of mismanagement is deeply alarming.
“Serious questions must be answered, and fast, about who knew what and when. At a time when families and businesses are already being squeezed by rising prices, tax hikes and a costly energy crisis, the country can ill afford another costly bailout.”
The errors come to light as the Chancellor grapples with the economic crisis caused by the ongoing war in Iran, which has caused oil prices to surge and left consumers facing a potential energy bill crisis.
Reeves is understood to be putting together a bailout package for those who will be most affected by the crisis, rather than a ‘blanket’ package, an approach the Conservatives took in 2022 following the Russian invasion of Ukraine.