The chief executive of the state-backed National Savings and Investments bank has been forced out over a scandal that left thousands of bereaved families owed almost £500m.
The savings institution is in discussions with the Treasury to repay about 37,500 people who collectively have £470m in deposits trapped in the bank after long-running operational errors.
The government has parachuted in a new chief executive and promised that those affected would be paid compensation where appropriate.
The pensions minister, Torsten Bell, told the House of Commons on Thursday that Dax Harkins had been replaced on an interim basis by Jim Harra, who led HM Revenue and Customs for more than five years before leaving in 2025.
The savings and premium bonds provider, which describes itself as the UK government savings bank, told ministers in December of an “operational failure” to comprehensively trace accounts of some customers who had died.
Bell said the root of the problem had been a “tracing” issue, and he reiterated that people’s savings were “100% safe” and guaranteed by the government.
Bereaved families recounted extreme difficulties in recovering money owed to them. Tracy McGuire-Brown told the BBC it had taken six years to receive her late father’s premium bonds. “It was the most awful, awful experience,” she said of her struggle to claim the £2,000 investment left in his will.
The former care home manager from Newbury in Berkshire said dealings with the bank had been upsetting and frustrating. She was also told she was not entitled to any wins made during the six years it took to process the claim.
“The final insult was this year when we finally received the monies: a letter stating it should be used to clear any debts my father had and be used towards funeral expenses, though he had died five years earlier,” she said.
Another complainant, Phil Fraser from Leeds, said he had received dreadful service in dealing with NS&I over his late father’s premium bonds. “Of all the financial institutions we dealt with regarding my late father’s estate, they were the worst,” he said.
Harra will undertake a review over the next three months into how the failings at NS&I occurred and set out what lessons must be learned, providing the “full truth”, Bell said.
He told the Commons: “NS&I is not regulated by the FCA, but the government expects it to live up to the same standards as regulated deposit-taking banks. And so it is right that NS&I is apologising today.”
The Treasury hired external advisers, including EY, to identify the scale of the errors. Three-quarters of the 37,500 cases identified relate to the period between 2008 and 2025.
NS&I had hired an additional 100 staff to help solve the problems, Bell said, and would contact representatives of estates to ensure they received the money they were owed, including interest on savings.
Bell said there was “no need for individuals to waste money on a claims management company or solicitor”. “I want to reassure people that the onus is not on them but on NS&I to act, to contact estate representatives and to reconnect beneficiaries with the money they are due,” he said.
NS&I is one of the largest savings organisations in the UK, holding more than £240bn for more than 24 million customers, and operating a monthly cash prize draw for holders of premium bonds. There have been complaints that it failed to pay out prizes to the families of deceased savers, and reports that it delayed payments and lost track of money.
Ian Futcher, a financial planner at the wealth manager Quilter, said the scale of NS&I’s issues were “clearly concerning, particularly as many people choose state‑backed savings for their simplicity and perceived security”.
He said: “When bereaved families are waiting months for access to money that should already have been released, or potentially face tax consequences due to administrative delays, it erodes trust in the very part of the market meant to provide reassurance.
“The immediate priority has to be getting money to the right people quickly and ensuring any tax complications caused by NS&I’s delays are addressed fairly.”
Bell said the government had set out three priorities for NS&I: to identify the cause of the tracing problems and solve them; to reunite beneficiaries of deceased customers with any funds; and to complete its business transformation programme.
The bank has struggled with its modernisation plan under Harkins’ leadership. Parliament’s spending watchdog said last month it had been a “full-spectrum disaster”.
Harkins, who was paid a package of more than £300,000 last year, had been chief executive since 2023, having joined NS&I in 2003. He did not receive a bonus last year, Bell told MPs.
The shadow business secretary, Andrew Griffith, said the government should recoup bonuses paid to NS&I executives.
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.”
It said the problem for current and new bereavement claims had been resolved and that robust measures had been introduced to ensure it did not happen again.
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.