NS&I Faces Major Compensation Payout Over Bereaved Families' Savings
National Savings and Investments (NS&I) is preparing to pay millions of pounds in compensation to customers following the discovery of significant operational errors. The Treasury-backed savings bank has issued a formal apology after it was revealed that many bereaved families did not receive money they were owed, alongside widespread reports of poor customer service.
Scale of the Problem: Up to £476 Million Affected
The banking giant, which provides savings and investment products to over 24 million customers including approximately 22 million Premium Bonds holders, is now undertaking a comprehensive programme to reunite people with their missing funds. According to official estimates, up to £476 million in deposits may have been affected by these systemic failures.
Pensions minister Torsten Bell informed the House of Commons that NS&I had notified the Treasury of "an operational failure to trace accounts comprehensively of some customers who had died." He explained that processes had failed to properly track customer holdings that were spread across multiple profiles or systems.
Compensation for Affected Families
The savings bank has indicated that those affected may receive compensation for the issue, though specific details about how missing funds will be returned alongside possible compensation payments are expected to be outlined by NS&I in May. Many families of deceased savers have complained that NS&I withheld Premium Bond prizes from them, with numerous reports of delayed payments and lost investments.
An NS&I spokesperson stated: "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."
Investigation and Customer Impact
Through extensive review work involving external advisers including EY and legal experts, NS&I has examined over 34 million customer records. This investigation points to a maximum of approximately 37,500 customers being affected, with three-quarters of cases relating to the period between 2008 and 2025.
Minister Bell emphasized that while this represents less than 0.2 percent of NS&I's total customer base, "it is still far too many." He specifically advised affected individuals that "there is no need for waste money on a claims management company or solicitor," stressing that NS&I bears responsibility for contacting people rather than requiring them to initiate claims.
Specific Cases Highlight Systemic Issues
In one particularly troubling case reported by The Telegraph, NS&I allegedly failed to inform a deceased saver's daughter about her mother's bonds while simultaneously losing track of £2,000 in bonds the daughter held herself. Another case involved NS&I refunding a woman's family for tax interest and legal costs after the institution lost track of two accounts linked to an investment portfolio.
In response to these failures, former HM Revenue and Customs boss Sir Jim Harra will replace Dax Harkins as NS&I's chief executive on an interim basis to "provide a fresh start," according to Minister Bell.
Broader Concerns About NS&I Operations
This compensation issue emerges against a backdrop of broader concerns about NS&I's operational capabilities. In February, the Public Accounts Committee expressed lack of confidence in NS&I's ability to successfully deliver its transformation programme designed to modernize operations. The committee noted that total costs for this programme had reached an estimated £3 billion in 2024 and criticized NS&I for being overconfident about its delivery capabilities.
The spending watchdog warned of significant risks to both NS&I's business and its customers should the modernization programme prove unsuccessful, highlighting the importance of resolving current compensation issues while addressing these broader operational challenges.
