NS&I undergoing programme to reunite bereaved families with their cash

Savings giant NS&I is undergoing a programme to reunite people with their cash, with up to £476 million in deposits being affected.

Concerns have been raised over bereaved families struggling to access their money.

Pensions minister Torsten Bell told the House of Commons that NS&I notified the Treasury of an operational failure to trace accounts comprehensively of some customers who had died.

He said: “The result of this failure is that not all savings were identified by NS&I and paid to the beneficiaries of their estates as they should have been.

“Specifically, processes failed to comprehensively trace some customer holdings where those were spread across multiple profiles or systems.”

Mr Bell said: “Bereaved families whose loved ones held accounts with NS&I will rightly be anxious about this news.”

He added: “Since being notified, the Treasury has ensured external advisers including EY and legal experts have been engaged to identify the scale of these errors.

“Through this work, NS&I have reviewed over 34 million customer records.

“That work is ongoing, but it points to a maximum of around 37,500 customers with up to £476 million in deposits being affected.

“Three-quarters of cases relate to the period between 2008 and 2025.

“This number is likely to fall in future but while it represents less than 0.2% of NS&I’s customers, it is still far too many.”

NS&I offers a range of savings and investments to more than 24 million customers, including more than 22 million Premium Bonds holders.

It is backed by the Treasury, so money held with it has 100% security.

Mr Bell said that while NS&I is not regulated by the Financial Conduct Authority (FCA), “the Government expects it to live up to the same standards as regulated deposit taking banks”.

He said the Government’s priorities now include ensuring that the problem is no longer taking place.

Mr Bell continued: “Our second priority is to ensure that we reunite beneficiaries of those customers who have passed away with any funds that NS&I holds. These deposits belong to customers.

“Returning them in no way represents an additional liability to the taxpayer.”

He said: “This issue is about tracing, not the security of any funds.”

Mr Bell said he had asked NS&I to publish a delivery plan in May detailing how it will take forward the work to reunite funds with their owners.

He said: “This will cover the number of cases affected, how NS&I will proactively contact representatives of estates to ensure they receive the funds they are due, including interest on savings, and the compensation that, where appropriate, will be paid.

“There is no need for individuals to waste money on a claims management company or solicitor.”

Mr Bell added: “We also recognise that there may be tax implications for affected estates and want to avoid bereaved families facing disproportionate disruption and administrative costs as a result of this error.

“We are exploring what support we can provide and will set this out alongside NS&I’s delivery plan in May.”

He said he had instructed NS&I to make it simpler for people to search for all accounts and products they might hold.

NS&I is responsible for reuniting beneficiaries with the money they are due, the pensions minister told MPs, adding “there is no need for individuals to waste money on a claims management company or solicitor”.

NS&I has put in place a dedicated programme team and has hired an additional 100 staff.

The causes of a tracing issue which affected NS&I customers has “been addressed and will not affect customers going forward”, Mr Bell said.

Former HM Revenue and Customs (HMRC) boss Sir Jim Harra will replace Dax Harkins as the chief executive of NS&I on an interim basis to “provide a fresh start”, Mr Bell said.

Mr Bell told the Commons: “ I’m confident that his extensive experience will help guide NS&I in the months ahead, and I will ensure Sir Jim’s review is shared with the chairs of the Treasury and the Public Accounts committees upon completion.”

NS&I was also under the spotlight in February, when the Public Accounts Committee (PAC) said it was not confident about NS&I’s ability to successfully deliver its transformation programme, which was designed to modernise NS&I’s operations.

Total costs of the programme hit an estimated £3 billion in 2024 and NS&I was over-confident about its ability to deliver the programme, the committee said.

The spending watchdog said there were risks to NS&I’s business and especially its customers if the programme is unsuccessful.