NS&I to Contact 34,000 Affected Estates Over Lost Funds Scandal
BBC Business reported Tuesday that NS&I lost funds victims will begin receiving contact from the government-backed savings bank within weeks. The outreach follows a scandal in which roughly 34,000 deceased customers’ estates were left short-changed due to administrative failures.
What the NS&I Lost Funds Scandal Involves
The errors stemmed from NS&I’s failure to properly identify all savings products held by customers at the time of their death. Bereaved families were consequently underpaid, with the total value of affected holdings reaching £476 million. The bank confirmed that all estates holding £10 or more would be contacted and made whole.
Repayments are expected to begin rolling out over the coming months. NS&I says the full disbursement should be completed by the first half of next year. Affected holdings will also be topped up with accrued interest. The uplift will reflect either the interest accumulated since the error occurred or the Bank of England base rate plus one percentage point, whichever proves higher. The bank confirmed the payments would be exempt from both inheritance tax and income tax.
Impacted families, executors, and beneficiaries are not required to take any action at this stage. Details on recovering reasonable legal costs incurred during the delays will also be provided.
Background: A Scandal That Claimed a Chief Executive
The scale of the problem had already forced significant consequences at the top of NS&I. The organisation’s former chief executive stepped down in March after the extent of the errors became public. Interim chief executive Sir Jim Harra issued a public apology Tuesday, acknowledging the institution had failed to process bereavement claims quickly enough. He said additional staff had been brought in to restore service levels.
The scandal exposed broader shortfalls in how NS&I, which holds 24 million customers and guarantees savings through government backing, handles the deaths of account holders. Families described spending years navigating excessive paperwork, repeated phone calls, and in some cases hiring solicitors at their own expense simply to access money legally owed to them.
Families Describe Years of Distress
BBC Business spoke to several affected families. One 82-year-old widow from Doncaster said it took six months to make meaningful progress after her husband’s death in 2024. She was reportedly told to produce a grant of probate despite her solicitor advising it was unnecessary for her case.
Another woman near Chepstow said she had completed all required paperwork to release her late husband’s £50,000 in premium bonds but was still waiting months later. She said the unresolved balance was preventing her from closing his estate entirely.
NS&I said the underlying error has now been corrected and that a more robust bereavement process was introduced in January.
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