NS&I to begin contacting victims of lost funds scandal

An important development from the financial markets: NS&I to begin contacting victims of lost funds scandalJust now Share Save Add as preferred on GoogleEmer MoreauBusiness reporterDan Kitwood / Getty ImagesNS&I said affected people should receive their loved ones' money in the coming monthsBereaved people hit by the National Savings and Investments (NS&I) lost funds scandal should be contacted by the bank in the coming weeks about accessing their loved ones' money. Thousands of people were not paid all the money that their deceased relatives had kept with the bank, due to errors in identifying all NS&I products held by the customer before they died. The estates of some 34,000 deceased people were affected, with the bereavement claims totalling £476m.

The former boss of the government-backed bank resigned over the scandal in March. NS&I said on Tuesday that all affected estates with holdings of £10 or more would be contacted "reunite them with the full value of those holdings". The funds will start to be paid out in the coming months and should all be paid out in the first half of next year.

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Affected holdings will be adjusted upwards to include either the interest accrued since the error occurred, or the Bank of England base interest rate plus one percentage point, whichever is higher. The bank said the funds will be exempt from inheritance tax and income tax. Those affected will be given details of the process for requesting reimbursement of reasonable legal costs caused by the delay in accessing the funds.

Affected families, beneficiaries, and executors do not need to do anything at this stage, the bank said. NS&I has said that the error that led to the scandal has been rectified, and a more robust process for bereavement claims was brought in in January. Sarah Coles, head of personal finance at AJ Bell, criticised the delays in the process.

"Instead of taking its standard two weeks to respond, NS&I is currently taking eight, with the service not expected to go back to normal until the autumn. "Anyone who has had to deal with an estate is no stranger to delays The extra six weeks' wait from NS&I will come as yet another headache for anyone slogging through the process. "'A lot of unnecessary work'Jennifer Brough, 82, from Doncaster, says NS&I needs reform because its service is "not good enough".

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It took her six months to make progress getting access to her husband's savings following his death in 2024. She said NS&I wanted her to provide a grant of probate, a type of legal document, even though her solicitor said this was not required. "They would not release the money until I produced this," Jennifer said.

"I found this very hard. At a time when you are low, having to get help to do it for me to save money, eventually being paid, with a lot of unnecessary work. "Rhona Edwards's husband Alex passed away in November.

After she gained probate, she completed all the paperwork to release his £50,000 worth of premium bonds.

Financial markets are tracking the development closely as investors assess the likely impact.