The exact sum is still being finalised, but sources indicate it could reach £400 million. NS&I is in urgent talks with the Treasury over the payout. Treasury officials are working through the 'very complex issue'. The bill for the payout is likely to fall on the taxpayer because the Treasury provides 100% backing for NS&I deposits.
The scandal was first exposed by The Telegraph on Tuesday, revealing chronic chaos in NS&I's payout systems and bereavement services. Families of deceased savers were forced to hire lawyers to recover money the institution had lost track of. Dozens of readers contacted The Telegraph with similar stories, some now considering legal action or withdrawing their savings.
Pensions minister Torsten Bell is due to update the House of Commons on Thursday and is said to be furious at the scale of the failures. NS&I boss Dax Harkins now finds himself on a collision course with Chancellor Rachel Reeves, whose department oversees the executive agency. Opposition politicians reacted with anger to the scandal. The timing is particularly awkward for Chancellor Rachel Reeves, who is already under pressure to control spending as the conflict in Iran threatens higher inflation and reduced fiscal headroom. Chancellor Rachel Reeves is simultaneously assembling a separate bailout package for households facing soaring energy bills linked to the Middle East crisis.
The revelations pile further pressure on Dax Harkins, who has also faced criticism over the spiralling £3 billion cost of NS&I's 'Project Rainbow' IT modernisation programme, branded a 'full-spectrum disaster' by the public accounts committee last month. Some saving customers at NS&I have been forced to pay fines to HMRC after receiving incorrect information from call handlers. From April, NS&I is set to drop the prize fund rate from 3.6% to 3.3%, leading to a drop in the number of prizes and making it harder to win.
An NS&I spokesperson apologised on Wednesday to anyone who has not received the customer service from NS&I that they should expect, particularly at such a sensitive time.
NS&I is expected to pay out to customers who claim there have been failures in managing their money, with failings dating back years. The bank has been accused of a series of errors, with some bereaved families claiming they did not receive money that was rightfully theirs. Around 37,000 savers are believed to have been affected by errors stretching back years, with bereaved families among those claiming they were denied money rightfully owed to them.
Key questions remain unresolved, including the exact final amount NS&I will pay out to affected savers and who specifically will be held accountable for the systemic failures. It is unclear how the Treasury will fund the £400 million payout and what impact it will have on taxpayers, or what specific measures NS&I will implement to prevent similar failures in the future. The number of customers who have taken or are considering legal action against NS&I has not been confirmed.