Pensions minister Torsten Bell (pictured) has set out the action the government will take to support thousands of bereaved families who have been unable to access savings of deceased relatives held with National Savings & Investments (NS&I).
Speaking in the House of Commons on Thursday, the minister said the government is committed to ensuring NS&I supports those affected by making the process for reuniting beneficiaries with their money as easy as possible. “We also recognise that there may be tax implications for affected estates and want to avoid bereaved families facing disproportionate disruption and costs as a result of the error,” Bell added.
Around 37,500 NS&I customers are thought to be affected by an operational failure to trace accounts for deceased customers, resulting in savings not being paid to beneficiaries of estates. Up to £476 million in deposits are affected, with three quarters of the cases relating to the period between 2008 and 2025.
External advisers have been engaged to identify the scale of the errors since NS&I reported the failure to the Treasury in December last year, and last week Bell announced former HMRC first permanent secretary Sir Jim Harra would replace Dax Harkins as NS&I chief executive on an interim basis.
“Sir Jim will undertake a review over the next three months to spell out in detail the background to the tracing problem and to set out what lessons must be learned by the NS&I,” Bell said.
Although the NS&I is not regulated by the Financial Conduct Authority (FCA), the government said it expects the organisation to live up to the same standards as regulated deposit-taking banks. Sopra Steria, NS&I’s customer-facing supplier, has assured the government the causes of the tracing issues have been addressed, and Atos, the supplier responsible for handling bereavement cases until last year, has also committed to full cooperation.
“Our second priority is to ensure that we reunite beneficiaries of those customers who have passed away with any funds that NS&I holds,” Bell continued.
“Those deposits belong to customers. Returning them in no way represents an additional liability to the taxpayer, and for the avoidance of doubt, let me spell out that those savings are 100% safe. The issue is about tracing and not the security of any funds, but it is important, none the less.”
NS&I has been instructed to publish a delivery plan by May, to include the number of cases affected, how it will proactively contact representatives of estates to ensure they receive the funds they are due, including interest on savings and the compensation that will be paid, “where appropriate”.
Compensation will be paid automatically in line with FCA best practice, Bell said, including compensatory interest where funds have been withheld from estates for longer than they should have been. Those with more complicated cases can approach NS&I directly to have their claims considered on an case-by-case basis.
“There is no need for individuals to waste money on a claims management company or solicitor,” the minister said. “I reassure people that the onus is not on them but on NS&I to act – to contact estate representatives and to reconnect beneficiaries with the money they are due.”
He continued: “…the priority for us is to ensure that people are reunited with their money and that they do not incur costs in trying to get it back. That is why I have been so clear with NS&I over the past few months that it makes sure that it understands the problem it is dealing with… That will involve contacting representatives of estates in the first instance, and that is what people need to rely on.
“As I said, I want to be clear with the public today that the onus is not on them; the onus is on NS&I to contact the people whose funds deserve to be reunited with them, and that is what we will all be focused on.”
Sam Grice is CEO and founder of Octopus Legacy. “Bereaved families should not be left dealing with uncertainty or forced to fight for access to funds that should be straightforward to release,” he said in response to the government’s announcement.
“Financial institutions and businesses have a clear duty to make this process as seamless and compassionate as possible. When that fails, it doesn’t just create inconvenience, it adds to the distress of an already difficult time. The process of handling someone’s affairs should support families, not compound their grief.
“There is a real need for wider change across the estate administration process, with better systems and clearer institutional accountability. Too often, the burden is placed on individuals at the worst possible moment, when it should sit with the institutions responsible.”
Concluding his address to the Commons, Bell said:
“The experience of administering estates is challenging for us all at the best of times, and it is of deep regret to me – and, I am sure, to everyone at NS&I – that we are putting anybody through complications.
“We will make every endeavour to reconnect people to their funds.”
Image credit: Torsten Bell ©House of Commons/Roger Harris Attribution 3.0 Unported (CC BY 3.0)
