The boss of one of Britain’s largest banks has left the organisation after a £470m savings scandal involving customers who died.
Dax Harkins will be replaced by the former HMRC boss Sir Jim Harra as chief executive of state-backed NS&I, on an interim basis, to “provide a fresh start”.
The pensions minister Torsten Bell announced the move on Thursday after it emerged that tens of thousands of customers had launched legal action against the savings bank because it had apparently lost track of customers’ life savings.
The Treasury-backed bank, which runs the Premium Bonds monthly lottery and offers a range of savings and investments to more than 24 million customers, is now launching a programme to reunite people with their cash, with up to 37,000 customers and £476m in deposits affected.
Mr Bell said NS&I had notified the Treasury of an operational failure to comprehensively trace accounts of some customers after they died.
He said: “The result of this failure is that not all savings were identified by NS&I and paid to the beneficiaries of their estates as they should have been. Specifically, processes failed to comprehensively trace some customer holdings where those were spread across multiple profiles or systems. Bereaved families whose loved ones held accounts with NS&I will rightly be anxious about this news. Since being notified, the Treasury has ensured external advisers including EY and legal experts have been engaged to identify the scale of these errors.”
Mr Bell added that NS&I had reviewed over 34 million customer records and that the work was still “ongoing, but it points to a maximum of around 37,500 customers with up to £476m in deposits being affected”. He said the bank would work to return the money and would pay compensation where appropriate.
Three-quarters of cases relate to the period between 2008 and 2025, he said, and represent less than 0.2 per cent of NS&I’s customers. He also said NS&I did not respond fully to previous warning signs.
Mr Bell added: “The FCA [Financial Conduct Authority] took enforcement action in 2018 against Santander relating to the tracing of accounts following notification that a customer had passed on. This received significant attention at the time. However, what is now clear is that NS&I and its suppliers did not respond to those warning signs as fully as I and, more importantly, their customers would expect. Nor did the last government act. Bereaved families whose loved ones held accounts with NS&I will rightly be anxious about this news.”
Mr Bell told the Commons that he wanted “to make sure NS&I has the very best leadership in place. Effective from today, I have appointed Sir Jim Harra, former HMRC first permanent secretary, to take over as the chief executive of NS&I on an interim basis, to provide a fresh start for NS&I’s next phase of development.” As well as taking over, Sir Jim would be carrying out a three-month review to “spell out in detail” what went wrong and the lessons that must be learned, he added.
Mr Bell said the causes of a tracing problem which affected NS&I customers had “been addressed and will not affect customers going forward”. He insisted the issue was about tracing, “not the security of any funds” held by NS&I, adding that “savings are 100 per cent safe”.
Shadow Treasury minister Mark Garnier asked: “Why has this government been sitting on their hands?,” he asked. “The poor performance and a botched digital transformation means that the NS&I are short-changing savers at a time when raising money for the government has never been more needed.
”People have been let down. Whilst NS&I have apologised for these mistakes, this will be of little comfort to those thousands of people who have lost out. The government does need to act swiftly and the families need to be compensated.”
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