Have NS&I’s top savings rates come at a cost?

Customer satisfaction levels fell to 75 per cent in 2022-23, according to NS&I’s annual report, down from 85 per cent the year before. The bank has now missed its customer satisfaction targets in two of the past three years. Of 3,140 ratings on the review site Trustpilot, 88 per cent gave it one star out of five.

Some customers have told of delays in sorting out complex cases such as releasing money from the accounts of deceased relatives, while others have complained of having tens of thousands of pounds go missing for months at a time.

“The general story is that customers are often delighted with NS&I’s rates, but disappointed with its service,” said James Daley, the managing director of the consumer group Fairer Finance. “Things have been going very wrong since the pandemic.”

• NS&I savings products ‘distort market’

Established in 1861, NS&I is the banking arm of the Treasury, which raises money from savers to fund government spending. It is best known for its Premium Bonds, a monthly prize lottery where savers can win up to £1 million. About £121.5 billion is held in these bonds, and NS&I holds about £220 billion in customer deposits in total.

The Treasury sets out how much it needs to raise each year (£7.5 billion for the 2023-24 financial year) and NS&I sets its savings rates accordingly. NS&I has a remit not to be too competitive with its rates, so as not to take too much business from commercial banks.

But NS&I’s popularity may be causing it difficulties. Technical problems and service issues seem to spike when it raises its rates.

In the first three months of this year, for example, NS&I increased the rate on its Premium Bonds three times, raised rates on its easy-access accounts twice, launched a one-year fixed-rate savings bond, and introduced a three-year fixed-rate green bond.

Phone waiting times increased from 75 seconds in December to almost ten minutes in March. The percentage of calls abandoned by customers before they got through rose from 3 per cent in December to 23 per cent in March. More than 3,600 complaints were lodged in March In December there were 1,783.

Service levels appeared to normalise over the summer. But when NS&I launched a market-leading one-year bond paying 6.2 per cent on August 30, demand spiked. Some 225,000 people opened an account before it was pulled on October 5.

Call wait times increased from 35 seconds in August to six minutes in September. Nearly 16 per cent of calls were abandoned in September, and the bank received 3,214 complaints.

James Blower from the comparison site The Savings Guru said: “As a bank, you know that by topping the best buy tables you’ll get a surge in activity, not just online but with people phoning and emailing.

• NS&I one-year bonds offer savers record high rate of 6.2%

“You see this with new banks who get caught out, but then they learn — NS&I doesn’t. It makes rate moves and then doesn’t staff up to cope. It really is unforgivable that it was unprepared again last month for the level of interest you would expect from topping the best buy tables.”

Nick Richards, 69, got his application in for NS&I’s market-leading savings bond just in time. He completed the application and paid £1,500 into the account on October 5, approving the payment on his banking app.

When Richards, a data protection officer from Wiltshire, didn’t receive an email confirmation he called NS&I and was told that it can take a few days for a payment to complete.

He later discovered that his application had been rejected, and the payment cancelled before it was processed. A customer service agent said this could have been due to the fact that the name on the card with which he made the payment, Nick, did not match the name on his NS&I account, which is Nicholas.

Richards said: “It is irritating. I applied in time, and I got the impression that everyone had flocked to open one so they made a decision not to accept any more purchases.”

Daley said: “NS&I is an important way for the government to borrow money from consumers, and it’s only right that it invests appropriately in its service levels. If a government-backed bank can’t treat its customers fairly, what kind of example does that set for the private sector?”

Legacy technology and staffing are two other issues dogging NS&I. The bank in its annual report said it had “deployed additional staff in our contact centres” to get on top of problems but said that the French IT services firm Atos, which runs its back-office operations, faced “a challenging recruitment market”. Atos employs 579 staff in NS&I’s call centre.

NS&I introduced a new two-factor authentication system in July 2022 to improve security, but this has also led to complaints. It sends a code via text or call when you log in, but customers have complained of not receiving their code, or of being unable to log in with it. NS&I said it had “had a negative impact on customer satisfaction levels” and led to longer phone waiting times.

David Belton, 72, struggled to contact NS&I last year when £70,000 of his and his wife’s savings went missing. The Beltons, from Derbyshire, wanted to move £140,000 from their NS&I accounts to Skipton Building Society to get a better rate.

Belton transferred £20,000 into an Isa, and his wife moved £50,000. When the money didn’t arrive in the new accounts, Belton called NS&I several times, waiting up to 25 minutes to get through and often being passed between different customer service agents.

It took two months to untangle what had happened and get the money back. Part of the problem stemmed from a cheque that had gone missing in the post, while Belton’s £20,000 had been sent to a “lost property” account after he accidentally put too much money into his Isa. As a result of the error, Belton’s savings have now lost their Isa wrapper protection, meaning they are subject to tax.

After it was contacted by The Times, NS&I apologised for the delays and paid £775 compensation.

“It was a disgrace frankly,” Belton said. “But I was just happy to have the money back.”

NS&I said: “Our customer phone lines can be busier at peak times — such as when we launch new products or introduce new security features — and we’re sorry that some customers have had to wait longer than usual during these periods of high demand. We are pleased that average call wait times in October so far are down to just two minutes and 20 seconds.

“We are continuing to recruit into our customer service team to make sure we can help as many customers as possible.”