NS&I ditches plans to stop paying Premium Bonds winners by cheque

NS&I has ditched plans to stop paying Premium Bond prize winners by cheque.

Previously, NS&I had intended to phase out the use of warrants, which are like cheques, from the December 2020 prize draw.

But in December it said that this will happen instead from spring 2021, after some customers struggled to contact the provider.

On Thursday, NS&I said it will no longer be moving all its customers to having Premium Bonds prizes paid directly to their bank accounts – meaning that customers who receive their prizes by cheque can continue to do so.

In the June 2021 Premium Bonds prize draw, nearly nine out of 10 (88%) prizes were either paid directly into customers’ bank accounts or reinvested into more Premium Bonds.

NS&I chief executive Ian Ackerley said: “We have responded to feedback from some of our customers and we have decided to retain the option for them to receive Premium Bonds prizes through the post.

“We will continue to encourage customers to have their prizes paid directly into their bank account, as many have done so in the last 12 months.

“Having prizes paid directly into bank accounts is quicker, easier and more secure for our customers, while also being more sustainable and better value for the taxpayer.”

Releasing its annual report, the Treasury-backed savings giant said it had missed its net Government financing target last year.

In 2020-21, NS&I delivered a record £23.8 billion of net financing to the Government, helping to boost state coffers to tackle the Covid-19 pandemic.

However, it undershot its revised 2020-21 target to raise £35 billion, within a £5 billion range either way of £30 billion to £40 billion.

Its figures showed a gross outflow of £64.6 billion last year.

Sarah Coles, a personal finance analyst at Hargreaves Lansdown, said savers “grabbed their money and ran” when NS&I announced rate cuts on its savings products last year.

NS&I’s report said that last summer, it had appeared that the inflow of cash was going to be higher than the Treasury required.

But after the rate cuts were announced, savers had moved “more quickly than has typically been the case to withdraw funds”.

The provider has a responsibility to balance the interests of savers, taxpayers and the broader financial services sector – and it decided to cut rates after its products had moved to the top of “best buy” tables.

From 24 November 2020 we’re reducing the interest rates on some of our savings accounts. We’re also reducing the Premium Bonds prize fund rate and odds of winning from the December 2020 prize draw. Find out more: https://t.co/Im3tZ5PLHC

— nsandi (@nsandi) September 21, 2020

The provider, which has 25 million customers, also drew criticism last year as customers struggled to get through to staff.

The report said NS&I’s legacy IT systems were not set up to enable the majority of customer-facing staff to work from home and staff availability was reduced by illness and the need for some to shield.

At times, there was a reduction of up to 60% capacity in its call centres and non-customer facing operations due to Covid-19 public health measures.

However, it had implemented a recovery plan, including deploying additional staff and introducing a chatbot.

Customer satisfaction fell from 84.3% in 2019–20 to 76.1% in 2020–21 – against a target of at least 85%.

Some 0.05% of transactions resulted in a complaint, compared to 0.03% in 2019–20.

The report said: “One of the many tragic consequences of Covid-19 was that it led to a rise in the number of contacts related to bereavements.

“We received many requests for access to savings held by a loved one who had died. We sought to prioritise requests for those in urgent financial need.

“We also dealt with higher numbers of vulnerable customers, and where appropriate invoked special rules to release customers from product terms if they were facing urgent need or distress.”

NS&I said in total it had missed six out of 11 service delivery measures, including its net financing target and measures relating to operational delivery, customer satisfaction, fraud management and diversity.

On the very rare occasions where a customer faced a financial loss as a result of fraud, through no negligence of their own, the provider said it had compensated them in full.

Mr Ackerley, said: “In a hugely challenging year, I regret the impact of operational issues on our customers, and apologise that they did not receive the levels of service that they have come to expect from NS&I.

“We are in a better position now, despite the ongoing pandemic, but there is more to do in the months ahead.

“Despite the challenges faced, I am proud of what we have achieved in an exceptional 12 months. We have delivered unprecedented levels of financing for Government and served millions of savers, as well as evolving our operation so that we can learn from this year and build a stronger and more resilient business that continues to attract the loyalty of millions of savers.”