National Savings and Investments (NS&I) has long been a cherished part of the UK financial landscape and your money is supposed to be completely safe.
All NS&I products are 100 per cent backed by the UK Government, so they are considered more secure than other savings institutions such as banks and building societies, whose customers’ accounts are only protected up to certain limits. They are considered so safe that they are suitable for widows and orphans and the general view is that you can’t lose your money in National Savings.
Unfortunately, however, it seems that National Savings itself can lose your money – particularly money belonging to widows and bereaved relatives. Winding up an estate is a dreadful strain at the best of times, but NS&I has been adding to the strain because of its administration errors, which have now come to light.
We are hearing stories about thousands of bereaved customers discovering that NS&I cannot find their loved ones’ money. The Telegraph has highlighted some of these terrible examples where individuals have been unable to get through to the helplines or been told their issues will not be sorted out for many months because of staff shortages. The issue has affected accounts worth £476m as NS&I failed to trace the account details of around 37,500 customers after they had died.
While coping with their grief and trying to deal with their loved one’s affairs, people have been left waiting, in a number of cases for several years, to get the situation sorted out. Some have even started legal action.
Millions of people put some of their hard-earned savings into NS&I and many grandparents have bought Premium Bonds for their grandchildren, hoping they will enjoy winning prizes over the years. Indeed, Premium Bonds are the country’s single most popular savings product.
This could seriously damage the image of 100 per cent safety that was always NS&I’s hallmark. The Government must urgently restore confidence.
NS&I is an agency of the Treasury, and the Chancellor relies on some of its revenue to bolster the public finances. Ministers must therefore take responsibility for reassuring the public.
Having been alerted to the problem last December and seeing the chaos covered across the media, Torsten Bell, the pensions minister, has rightly stepped in to try to sort out this mess.
It is not clear what has gone wrong, but the minister told Parliament that the cause of the problem has been found and resolved. He has promised that everyone’s money is 100 per cent safe and that the problem was about tracing people’s account records, not about losing their funds. He also promised that, “where appropriate”, those bereaved relatives who have struggled due to the NS&I failings will also receive compensation as well as their money back.
The chief executive, Dax Harkins, has been replaced today by Sir Jim Harra, who will immediately start work on a review over the next three months to investigate the background to the tracing issue. He is tasked with ensuring everyone’s savings are identified, their records corrected, and they are reunited with their funds. His plan of action must be submitted by May this year and the Government has already put in place a dedicated programme team, with 100 extra staff, to get things sorted.
A magazine advert for Premium Bonds from the last century – Alamy
Part of the problem may well stem from the so-called business transformation programme that was put in place in 2019 just before the Covid disruptions. Perhaps the rise of “Working From Home” didn’t help either. But the programme’s aim was to reduce costs, modernise technology and improve NS&I’s flexibility to respond to customer demand. Unfortunately, this transformation programme has already cost taxpayers over £3bn, but has been an expensive disaster so far. Last month, the public accounts committee concluded that it exposed taxpayers to unacceptable risks and that it is not confident NS&I can deliver this digital transformation project.
In light of this, the Government has also appointed David Goldstone, the independent chair of the Office for Value for Money, to support NS&I in bringing the transformation programme “back on track”.
It is really important that NS&I’s reputation for great, safe products is restored. It has always catered for people who may not be financially savvy and for whom their National Savings bonds may comprise their entire non-housing wealth. Ministers have stressed that customers do not need to spend money on solicitors or contact NS&I to find out whether they are affected, because it is all being sorted out. I certainly hope this is the case and that ordinary workers can once again buy National Savings products without worries about losing their money.
Ros Altmann is a former pensions minister