Premium Bonds payouts in chaos as NS&I faces surge in complaints and possible huge compensation bill
National Savings and Investments could be forced to pay hundreds of millions in compensation after bereaved families accused the institution of short-changing premium bonds, a crisis laid bare by a sharp rise in disputes. The state-owned bank has apologised as families report lost records, delayed payouts and withheld prizes. Complaints have more than doubled in just over three years, intensifying scrutiny of how taxpayer-backed savings are handled.
Premium Bonds payouts under scrutiny
Bereaved families say the bank lost track of investments, delayed releases of funds and withheld premium bond prizes, forcing some into legal fights and thousands of pounds in extra costs. The institution looks after around £100 billion for more than 26 million people and has been accused of providing incorrect information through call handlers that led some savers to pay fines to HMRC. Officials have apologised for prolonged and unhappy experiences endured by those attempting to settle estates.
One case escalated to an ombudsman ruling after a widower was denied access to his late wife’s premium bonds despite informing the service of her death in time for prize counts; the bank failed to record the call and was ordered to release the prizes. The organisation also keeps premium bond prize wins paid to accounts where the holder has been dead for more than a year, a practice highlighted in the complaints.
Scale of complaints and institutional failings
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. Official rulings from the ombudsman noted the bank blamed some errors on the Covid pandemic and on outsourcing to overseas staff. Documents reveal relatives received correspondence addressed to deceased account-holders, adding to stress and grief for families trying to resolve estates.
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.
Immediate reactions and accountability
Andrew Griffith, Shadow Business Secretary, said: “Delivering a simple set of government-backed savings products should not be this hard. The private sector does that every day. ” He added that failures were the result of “poor performance and a botched digital transformation. ” Dax Harkins, NS&I’s chief executive, has been criticised as the fallout intensified, and the bank has issued an apology to affected families.
Financial and estate consequences cited by claimants include lost interest, missed property purchases and fines stemming from incorrect guidance, all amplifying the human cost behind the complaint numbers held by the ombudsman.
What’s next
The immediate outlook points to further ombudsman decisions and potential compensation claims as families pursue redress. Regulators and the institution will face pressure to publish remedial plans and to speed up legacy case resolution. Watch for more rulings and formal compensation orders tied to premium bonds as the dispute volumes feed through the complaints system, with taxpayer exposure rising if exceptional awards become frequent.
