The Treasury select committee has demanded answers from National Savings and Investments, claiming the service has caused a “great deal of anxiety” to consumers in recent months.
Chair of the committee, Mel Stride, wrote to the chief executive of the state-owned savings bank yesterday (December 22) citing concerns over the bank’s “dramatic cuts” to interest rates, low levels of customer satisfaction and its decision to stop paying Premium Bond winners by cheque.
The NS&I has come under fire recently after a reduction in service levels saw savers face delays when trying to access their cash, while the bank also reduced the chances of winning from its premium bonds.
At the end of November, NS&I’s interest rates for ‘direct savers’ dropped from 1 per cent to 0.15 per cent.
Those in an investment account saw their rates slashed by 79 basis points — from 0.8 per cent to 0.01 per cent — while income bonds fell as much as 115 basis points, also to 0.01 per cent.
Its premium bonds prize fund rate was reduced from 1.4 per cent to 1 per cent.
At the time, NS&I said the reductions would see the provider “align” its savings products with rates offered by other banks and building societies.
In the letter to Ian Ackerley, CEO of NS&I, Mr Stride said: “The dramatic cuts that NS&I have made to their interest rates on savings products have also resulted in significant outflows of deposits in recent months, and a great deal of anxiety on the part of customers.
“In addition, NS&I’s plans to end payments of premium bond winnings by cheque in 2021 may increase risks for vulnerable consumers with limited access to the internet.”
Mr Stride said while NS&I had taken steps to keep service levels up during the pandemic, they appeared to have been “unsuccessful”.
According to NS&I’s own statistics, the six months to September saw a 43 per cent increase in complaints compared with the preceding six months.
The NS&I has apologised for the dip in service levels, pleading it was doing all it could to “make [its] teams bigger while following government guidelines”.
A statement on its website said: “We’re sorry if you've had trouble contacting us recently. We understand how frustrating it can be, and we’re working hard to get everything back on track.
“A huge number of you have chosen NS&I as the home for your savings this year. But because of this we’re taking a lot of calls, and our website has also had many more visitors than normal.”
The Treasury committee also probed Mr Ackerley on why the service needed an extra £40.5m, funded by the taxpayer, to “build greater operational resilience”.
Mr Stride asked the service to provide extra details on the manner of complaints, the steps taken to address them and details of how the extra cash would be used.