NS&I will 'reunite' bereaved families with cash and pay compensation in some cases, minister says

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National Savings and Investments is poised to pay compensation to some savers after a series of blunders at the state-backed bank.

It has been accused of short-changing bereaved families by losing track of investments, delaying payouts and withholding premium bond prizes.

NS&I said it estimated that up to 37,500 bereavement claims with a total value of up to £476million in customer deposits may have been affected.

NS&I chief executive Dax Harkins has been dismissed this morning as a result of the fiasco. Sir Jim Harra has been appointed as chief executive on an interim basis.

In a statement to the House of Commons on Thursday, pensions minister Torsten Bell said the government would 'ensure the appropriate compensation' is paid to some affected customers.

Bell said the government had three priorities, namely addressing the cause of the tracing issues and finding a solution, 'reuniting' beneficiaries of late customers with any funds that NS&I holds, including 'compensation where appropriate' and completing NS&I's 'challenging' business transformation programme.

Bell 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. 

Pensions minister Torsten Bell will address the NS&I matter in a statement to MPs

Around three quarters of the cases relate to the period between 2008 and 2025, Bell said. 

Affected customers will be contacted by NS&I, with the pensions minister adding that the onus was on the bank rather than customers to identify affected customers and resolve the sage.

Bell said the cost of the proposals would not be shouldered by British taxpayers. he said the plans did not 'represent an additional liability to the taxpayer.'

NS&I must now publish a delivery plan in May on how it will work to reunite lost funds with their owners, with Bell added that compensation would be paid 'where appropriate'. 

No detail about the level of compensation which could be involved was revealed. Much of the sum to be paid out is likely to represent repayments, where people had money invested but did not receive what they were fully owed, but there will also be some compensation.

Bell said compensatory interest could be included in payouts in some cases, as well as on a 'case-by-case basis' for more complicated cases. 

The pensions minister said affected customers’ money remained safe. 

He acknowledged that there may be tax implications for some affected estates as a result of the saga.

Bell said the Treasury wanted to 'avoid bereaved families facing disproportionate disruption and administrative costs as a result of this error'. He said the Treasury was exploring what support could be provided to affected families in this regard, with details expected to be published in NS&I's delivery plan in May. 

In a statement on Thursday, NS&I said: 'NS&I will ensure customers' estates are appropriately compensated. More details will be published in May.' 

It added: 'These errors happened because the search process used when handling a bereavement claim failed to identify all NS&I products. The issue has been resolved for current and new bereavement claims and robust measures have been introduced to ensure this does not happen again.' 

The pensions minister urged affected individuals not to contact a claims management company or solicitor to be reunited with their money.

To tackle the fiasco, NS&I has put in place a dedicated programme team and hired an additional 100 staff. 

Sir Jim will undertake a review to investigate how the failings at NS&I were allowed to persist after the bank was warned over missing customer accounts. 

Some customers, including the bereaved, were reportedly forced to turn to lawyers to help recover the money they were owed by NS&I, incurring additional costs. 

This week, NS&I apologised to customers suffering a bereavement who had not received the customer service they expected. 

A spokesperson for NS&I said on Wednesday: '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.'

Zoe Gillespie, investment manager at RBC Brewin Dolphin, told the BBC's Today programme: 'The NS&I is currently working through a £3billion modernisation programme which is years behind, so there appears to be some issues with potential tech or customer service problems.' 

NS&I needed to 'get on the front foot' to restore investor and savers' confidence, Gillespie added. 

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Premium Bonds winners March 2026: See all the prizes from £1,000 to £1m and search our interactive tables

In February, NS&I was accused by a committee of MPs of being 'bullishly confident' over a £3billion digital transformation project. 

The Public Accounts Committee said it was not confident the scheme, designed to modernise NS&I's operations and measurably reduce its running costs, could be successfully delivered.

The state-backed bank was found by the MPs to have no workable plan and claimed the bank lacked the skills to deliver it.

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

Every month, more than a million Premium Bonds winners are chosen at random and two bond holders pocket £1million each. Other prizes range from £25 to £100,000.

Have you been affected by NS&I blunders or had money go missing? Email editor@thisismoney.co.uk