I am today updating the House on the steps being taken to address historic failures in the handling of some bereavement claims by National Savings and Investments.
On 26 March, I informed the House that NS&I had identified a population of cases where, following notification of a customer’s death, holdings were not fully settled in a timely way. These failures relate to past tracing and operational processes and do not reflect current practice. I recognise the distress and inconvenience that these shortcomings may have caused to those that have suffered bereavements.
The Treasury has instructed NS&I to put this right swiftly and fairly, requiring a delivery plan detailing how it plans to do so to be published during May.
NS&I has now completed extensive work to understand the affected population and to design a remediation approach. Today NS&I is publishing the delivery plan that it will follow to ensure proactive timely contact, payment of outstanding holdings, and appropriate compensation.
The current remediation population is estimated at up to 34,000 cases, with a total value of approximately £367 million. These figures have reduced since my announcement and are likely to reduce further.
We are committed to making the process for reuniting estates with their money as easy as possible. NS&I will contact all affected estates with holdings of £10 or more to reunite them with the full value of those holdings that should have been returned to them earlier. To ensure estates have not been disadvantaged by the delay, this will then be adjusted upwards to include either the higher of the interest accrued since the error occurred or the Bank of England base rate plus 1 percentage point, in line with Financial Ombudsman Service principles.
The de minimis threshold is being set lower than seen in some redress cases reflecting the priority we attach to returning funds to those affected while avoiding creating disproportionate administrative burdens and disturbance in the cases of the smallest holdings.
Contact will be made with estates through executors or personal representatives. Beneficiaries will not be contacted directly except where, as is often the case, beneficiaries are themselves executors or personal representatives. Where solicitors or professional executors dealt with the administration of an estate they will be contacted and it will be for them to contact beneficiaries. All cases will be subject to proportionate tracing checks to ensure payments are made safely and to the correct party.
Remediation will be delivered in phases. NS&I will begin contacting the first cohort next week, with payments made shortly after contact. NS&I aims to return holdings to their rightful owners as swiftly as possible and expects to have completed this remediation programme in the first half of 2027.
I have committed to helping bereaved families avoid disproportionate disruption and administrative costs that could result from the inheritance tax consequences of rectifying previous tracing errors. To achieve this I am confirming today that there will be a full inheritance tax exemption for the holdings of the remediation population affected by the NS&I tracing error which are returned to the estates to which they rightly belong. To further ease the administration of estates, the personal representatives or executors will not be liable for any income tax ordinarily due in their role on interest accrued before death or in the administration period. HMRC is working with NS&I to ensure that executors, personal representatives and beneficiaries do not incur any unnecessary administrative burdens or costs where tax is not due.
Beyond individual redress, NS&I has strengthened its bereavement processes to ensure these tracing errors do not reoccur. While this has driven an increase in processing times, an additional 100 people have been hired to ensure this is temporary. NS&I is also exploring broader improvements to the bereavement journey, including alignment with cross-Government services such as Tell Us Once.
As I committed to the House, Sir Jim Harra, acting chief executive of NS&I, is leading a wider review into the background to the tracing problem and what lessons must be learned. This will report before the summer recess and be shared with the Chairs of the Treasury and Public Accounts Committees. The Treasury has also started the process to recruit a permanent chief executive.
Further information for anyone who believes they or loved ones may have been affected is available on the NS&I website and its contact centre is open seven days a week.
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