About 24 million people have investments in £1 bonds which are entered into a monthly prize draw, with tax-free winnings ranging from £25 up to £1m. However, National Savings and Investments (NS&I) is under fire after confessing to long-running problems with tracing accounts of deceased customers, leaving 34,000 bereaved families owed £367m.
‘A Year of Hell’ for Bereaved Families
Kate Constable described the process of claiming £46,000 in premium bonds belonging to her late mother as “a year of hell.” The claim took 14 months, largely due to NS&I’s rule requiring probate for amounts over £5,000. “They only deal in paper… No one can tell you anything helpful. It’s hugely frustrating,” she said. The money was intended for her father, who has Alzheimer’s and is in a care home, forcing the family to take out a loan for his fees.
Outdated Processes and Delays
NS&I’s reliance on paper-based forms and postal correspondence has been heavily criticized. Unlike other banks, where probate thresholds are as high as £50,000, NS&I’s £5,000 limit means many families must navigate lengthy legal processes. The bank’s response time for bereavement inquiries has stretched to eight weeks, compared to the usual fortnight, due to backlogs.
Duncan Stevens, CEO of tracing experts Gretel, noted that NS&I’s records span over 160 years, moving through multiple systems and formats, making tracing difficult. “A family may be asked to give evidence of ownership of an account they did not know existed,” he said.
Impact on Families
Peter, from Southport, contacted NS&I about five accounts belonging to his late father totaling about £55,000. The bank told him none existed except one with £12,000. Later, he discovered statements from 2023-2025, suggesting the accounts were valid. The total could exceed £60,000 in withheld funds, including interest.
Constable was offered £150 compensation but had to provide evidence of her father’s care home fees. She refused, and NS&I eventually waived the requirement. “That was the final straw,” she said.
Government Response and Redress
Sir Jim Harra, former HMRC boss, has been appointed to fix the tracing issues. He admitted a new, thorough process introduced in 2025 takes longer but promised improvements. The government confirmed redress payments will be exempt from inheritance and income tax.
NS&I apologized for the delays, stating: “We sincerely apologise to anyone making a bereavement claim who has not received the customer service that they should expect.” Extra staff have been hired to clear the backlog, with a target to return to normal processing times by autumn 2026.
Constable’s money finally appeared in her father’s account last week, but the ordeal has left lasting frustration. “There must be a better way,” she said.
