The boss of National Savings and Investments has stepped down from his role after it emerged the bank will have to repay hundreds of millions of pounds to its customers over missing savings.
The government-backed savings institution is in discussions with the Treasury to reunite about 37,500 people whose money has been misplaced because of historical failings, after a review identified about £470m in deposits affected.
The bank could have to pay out hundreds of millions of pounds, though the exact amount has not yet been determined. Much of this sum would represent repayments, where people had money invested but did not receive what they were fully owed, but there will also be some compensation.
The bank has found a series of errors dating back several years. The pensions minister, Torsten Bell, told the House of Commons on Thursday that there would also be “compensation where appropriate”.
He said the root of the problem was a “tracing” issue, and reiterated that people’s savings were “100% safe and they are guaranteed by the government”.
He said the Treasury was notified in December last year of a failure by NS&I to trace details of accounts for some customers who had died.
Bell told MPs that NS&I’s chief executive, Dax Harkins, had resigned from his role on Thursday, and had been replaced on an interim basis by Sir Jim Harra, who led HM Revenue and Customs for more than five years before leaving in 2025.
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”, the pensions minister 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”, which helped the bank identify up to 37,500 affected customers with up to £476m in deposits. Three-quarters of those cases related to the period between 2008 and 2025.
NS&I has hired an additional 100 staff to help solve the problems, Bell said, and will proactively contract representatives of estates to ensure that they receive the money they are owed, including interest on savings, and “compensation that, where appropriate, will be paid”.
Bell added that there is “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,” Bell 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 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 was 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.
Bell said the government had set out three priorities for NS&I: identifying the cause of the tracing problems and solving them; reuniting beneficiaries of deceased customers with any funds; and completing its “challenging” business transformation programme.
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.”