A good little Ernie

Financial Adviser

Sometimes organisations are so keen to be cutting-edge they forget the principles on which they were founded.

Take for example, NS&I, the Treasury-backed body which is neither a bank nor an investment fund, whose main purpose is to provide lending to the government on the cheap.

Historically, people have bought premium bonds as a ‘gamble’, in the hope of winning a lump sum, even the £1m top draw. In so doing, they do not get interest rates nor does the money grow with inflation; if anything, the value depreciates.

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For the self-employed and those who have any annual lump sum to pay – for example those with interest-only mortgages – warehousing money in premium bonds on the off chance of a decent ‘win’ until the debt is due is a good punt.

Now the rules have changed. Part of the reasoning for this is that older people are not familiar with the ‘new’ technology, which is an insult. The reality is that older people are often wiser and are fully aware that when the technology works, it is fine, when things go wrong, the provider usually denies all responsibility.

Further, and more pertinently, a premium or pensioner bond is not something that most people leave home in the morning to buy. They go to the post office for a number of reasons and while there make an instant decision to buy premium bonds.

The old and not with it argument is contradictory when it comes to pensioner bonds since these are the very people the product is aimed at. If the real problem is a breakdown in talks with the Post Office, then there are any number of other organisations, such as supermarkets, that will be more than willing to do a deal with NS&I.

The truth, one suspects, is senior managers at NS&I want to punch above their weight, they want to show off that they are at the cutting edge of financial services and bugger their core customers.

NS&I should review the decision to go online, by post or by telephone, and return a face-to-face service to the general public. If they do not, then the chancellor should step in and force them to.