NS&I Complaints Double as Families Accuse Government Savings Bank of Failures

National Savings & Investments could be forced to pay hundreds of millions of pounds in compensation after being accused of "short-changing" bereaved families across Britain, in a scandal that has seen the state-backed bank's complaint volumes more than double in just over three years.

Data from the Financial Ombudsman Service shows complaints rose from 73,000 in the second half of 2021 to almost 160,000 in the first half of last year, more than doubling in just over three years. The state-owned bank is among Britain's largest financial institutions, looking after around £100 billion for more than 26 million people.

The families of deceased NS&I savers have accused the bank of losing track of investments, delaying payouts, and withholding Premium Bond prizes, incurring thousands in additional costs in lawyer expenses. Documents seen by The Telegraph reveal families received letters addressed to deceased relatives, adding to their stress and grief. Some have been made to pay fines to HMRC after receiving incorrect information from NS&I call handlers.

Among the documented cases, official rulings referenced a widower left unable to access his late wife's Premium Bonds, calling what should have been a "straightforward process" a "prolonged and unhappy experience." In a separate incident, NS&I was forced to refund a woman's family for tax interest and legal costs after the savings bank lost track of two accounts linked to an investment portfolio. The family was forced to pay probate lawyers around £20,000 extra after a three-year investigation to the bottom of the missing funds. The error also meant they had incorrectly valued the estate for tax purposes, costing the family £2,700 in additional inheritance tax.

Others claim to have lost thousands of pounds in interest because of delays in money being released, or have even missed out on buying homes.

An NS&I spokesman 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."

The crisis has drawn sharp political criticism. Andrew Griffith, the Conservative Party shadow business and trade secretary, said: "Poor performance and a botched digital transformation means that NS&I are short-changing savers at a time when raising money for the government has never been more needed. Delivering a simple set of government-backed savings products should not be this hard. The private sector does that every day."

Last month, the Public Accounts Committee said a £3 billion plan to digitise the bank, originally called Project Rainbow, was a "full-spectrum disaster." First announced in 2020, it had meant to be completed in 2024, but costs have ballooned from £1.3 billion, with NS&I accused of spending £43 million on consultants alone. Official rulings from the ombudsman noted the bank blamed some errors on the Covid pandemic and on outsourcing to overseas staff.

Dax Harkins, NS&I's chief executive, has been publicly criticised as the bank apologised for the errors and the distress caused to bereaved families.

The financial exposure could ultimately fall on the public. Most compensation awards for failings are normally limited to a few hundred pounds, but the ombudsman can make larger awards in exceptional cases; those larger payments would ultimately be funded by the taxpayer. The combination of rising complaint volumes and the scale of customer holdings has raised the prospect that compensation liabilities could run into the hundreds of millions.

Premium Bonds were introduced in 1956, then became an independent government department in 1969, and rebranded as NS&I in 2002 — built on a founding promise, stretching back to 1861, of being a safe place for ordinary savers. Whether Harkins and the Treasury can arrest the institutional collapse in trust will define the bank's next chapter.