British taxpayers could be forced to bail out a potential National Savings and Investments (NS&I) compensation package to around 37,000 customers whose funds were lost by the organisation.
The state-backed bank is currently negotiating with the Treasury over repayments which could be worth as much as £400million.
Treasury officials are working through what they describe as “a very complex issue” with NS&I – though the final sum remains undetermined.
The scandal was brought to light on Tuesday, revealing systematic problems including grieving families being denied money owed to them.
Pensions minister Torsten Bell is due to address MPs in the Commons on Thursday regarding the crisis.
He is said to be “furious” that problems were allowed to escalate to this extent.
NS&I chief executive Dax Harkins, meanwhile, is on a collision course with Rachel Reeves, whose department has oversight of the savings bank as an executive agency.
The Treasury provides complete financial backing for NS&I, meaning taxpayers may ultimately foot the bill for the compensation.
The Government-backed savings bank is currently negotiating with the Treasury
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Shadow Chancellor Sir Mel Stride said: “Hard-working taxpayers could be asked to pick up the bill for what appears to be a staggering failure of oversight.
“The idea that £400million of taxpayers’ cash may now be needed to put right years of mismanagement is deeply alarming.”
He added: “Serious questions must be answered, and fast, about who knew what and when.
“At a time when families and businesses are already being squeezed by rising prices, tax hikes and a costly energy crisis, the country can ill afford another costly bailout.”
Meanwhile, Reform UK’s Treasury spokesman Robert Jenrick said: “This is incompetence on a staggering scale.
Shadow Chancellor Sir Mel Stride is labelled the scandal a ‘staggering failure of oversight’
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Rachel Reeves has been urged to ‘explain how this happened and who will be held accountable’
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GETTY“Rachel Reeves must explain how this happened and who will be held accountable.
“The public should not be forced to pay for a Government-backed institution’s mistakes.”
Bereaved relatives were reportedly short-changed through lost investments, delayed transfers and withheld Premium Bond winnings, The Telegraph revealed.
Some families of deceased savers were compelled to hire solicitors to recover funds rightfully belonging to them.
The NS&I chief executive previously came under fire over runaway modernisation costs
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NS&IIn certain instances, the bank had entirely lost track of customers’ lifetime savings.
The NS&I chief executive previously came under fire over runaway modernisation costs that have ballooned to £3billion.
The transformation initiative, originally named Project Rainbow, launched in 2020 to cut operating expenses and update systems.
Last month, the public accounts committee branded it a “full-spectrum disaster”.
An NS&I spokesman said: “We recognise that dealing with bereavement can be challenging and would like to apologise to anyone who has not received the customer service from NS&I that they should expect, particularly at such a sensitive time.”
