National Savings and Investments is preparing to repay hundreds of millions of pounds to its customers over missing savings, in what is expected to be the single biggest payout in the bank’s 160-year history.
The government-backed savings institution is in discussions with the Treasury to recompense about 37,000 people whose money has been misplaced due to historical failings.
It means NS&I could have to pay out hundreds of millions of pounds, though the exact amount has not yet been determined. This would not be compensation, it is understood, but represents where people had money invested but did not receive what they were fully owed.
It is not clear yet how the payout will be funded, according to the Telegraph, which first reported the news. It is possible that the Treasury, which provides the financial backing for the bank, may have to absorb the cost.
The bank has been accused of a series of errors dating back several years, with reports that bereaved families did not receive money that was rightfully theirs. NS&I said it apologised to anyone suffering a bereavement who had not received the customer service “they should expect”.
The pensions minister, Torsten Bell, is expected to address the issue in a statement to the House of Commons on Thursday.
NS&I is one of the largest savings organisations in the UK, holding more than £100bn for about 26 million customers and holding a monthly cash prize draw for holders of premium bonds. There have been complaints that NS&I failed to pay out premium bond prizes to the families of deceased savers, and reports that the bank delayed payments and lost track of money.
The bank recently came under fire over the spiralling cost of its modernisation programme, with the parliament’s spending watchdog saying last month it had been a “full-spectrum disaster”. The cost of the project, which launched in 2022, has risen from £1.3bn to £3bn, with “little transformation” delivered, according to the public accounts committee.
The bank is preparing to cut its “prize rate” for its premium bond holders – the proportion of the total invested amount paid out in prizes – from 3.6% to 3.3% a year, starting from April.
A spokesperson for NS&I said: “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.”