National Savings and Investments (NS&I) is set to begin contacting thousands of individuals affected by a scandal involving lost funds, promising to reunite them with money owed by their deceased relatives. The government-backed bank confirmed that outreach to affected estates, holding £10 or more, will commence in the coming weeks. This initiative aims to rectify errors where not all savings products held by a deceased customer were identified, leading to incomplete payouts.
The scale of the issue is significant, impacting the estates of approximately 34,000 individuals and involving bereavement claims totaling £476 million. The scandal led to the resignation of the former head of NS&I in March. The bank has stated that the process of repaying these funds will begin in the coming months, with all payments expected to be completed within the first half of next year.
To compensate for the delay, affected holdings will be increased. The adjustment will be calculated as the higher of either the interest accrued since the error occurred or the Bank of England base interest rate plus one percentage point. Importantly, these reimbursed funds will be exempt from both inheritance tax and income tax. NS&I has also indicated that those affected will receive details on how to claim reimbursement for reasonable legal costs incurred due to the delays in accessing their funds. The bank assures that affected families, beneficiaries, and executors do not need to take any action at this time.
NS&I has reported that the underlying error causing the scandal has been corrected, and a more robust procedure for handling bereavement claims was implemented in January. Despite these assurances, some individuals have shared experiences highlighting the difficulties faced. Jennifer Brough, 82, from Doncaster, described her six-month struggle to access her late husband's £50,000 in premium bonds in 2024. She noted that NS&I initially required a grant of probate, a document her solicitor deemed unnecessary, causing significant frustration and extra work during a difficult time.
Another account comes from Rhona Edwards, whose husband Alex passed away in November. After obtaining probate, she completed the necessary paperwork to release his £50,000 worth of premium bonds. However, by March, she was still awaiting communication from NS&I, and the delay was preventing her from finalizing his estate. NS&I, which serves 24 million customers with products like premium bonds, emphasizes the security of its government-backed savings. Nevertheless, the bank's processes have caused distress for some bereaved families who have reported lengthy waits, multiple communications, and the need to seek legal assistance, incurring additional expenses.
Sir Jim Harra, the interim chief executive of NS&I, issued an apology, acknowledging that repaying these funds is a crucial step toward resolution. He stressed the importance of treating all bereavement claims with sympathy and processing them efficiently. Harra admitted that the current process is taking longer than it should and that additional staff have been brought in to improve service levels and bring the system back on track. The bank's commitment is to ensure that all customers are treated fairly and that their cases are handled with the utmost care and speed moving forward.
