National Savings (Remediation Scheme) Regulations 2026

Baroness Neville-Rolfe Excerpts

Wednesday 22nd July 2026 Lords Chamber

Moved by

[Baroness Neville-Rolfe]

That this House regrets that the National Savings (Remediation Scheme) Regulations 2026 were introduced only after a prolonged delay affecting up to 37,500 bereavement claims; and that failures by National Savings and Investments have given rise to a substantial liability for the taxpayer.

Relevant document: 6th Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument)

[Baroness Neville-Rolfe (Con)]

My Lords, this instrument provides National Savings & Investments with the legal powers it needs to establish a compensation scheme and to return money that should have been paid to the estates of deceased customers, in some cases many years ago. That remediation must now proceed as quickly and comprehensively as possible.

However, it would be wrong to allow this negative resolution instrument to pass without formally noting the harm that has been caused and the serious failures that have surrounded this entire saga. It is significant that the Secondary Legislation Scrutiny Committee drew the regulations to the attention of the House because they raise significant public policy issues and because Ministers have not answered important questions. Moreover, the Commons Statement of 26 March on the problems at NS&I was not repeated in our House because we had broken for Easter.

I add that this is not the only problem we have heard about in relation to probate. There were terrible delays, especially during Covid—sometimes of years—and I have personal experience of lost submissions to the probate office.

As recently as 6 July, we debated my noble friend Lord Mackinlay’s amendment to force financial institutions, which would include NS&I, to use the IHT423 scheme to allow executors to source funds to pay inheritance tax in advance of the unrealistic six-month deadline for probate and to avoid the punitive rate of interest: 4% above base rate, so that is 7.75% at present. All this makes you weep for the poor bereaved already going through an emotional upheaval.

The wording of my regret Motion is intended to highlight two matters: first, the prolonged delay that has affected tens of thousands of bereavement claims, and, secondly, the substantial financial consequences arising from the failures of National Savings & Investments. I also have a number of questions for the Minister, and the responses may provide reassurance. I recognise that some of the failures to which I will refer will have occurred under Conservative Administrations and, indeed, previous Labour Administrations. This is not only an administrative or a technical problem; it has had a profound human impact. Bereaved families were entitled to receive the savings of their deceased relatives but, through no fault of their own, were denied access to that money.

The search process used by NS&I when handling bereavement claims did not always identify every product held by the deceased customer. As a result, estates were repaid only part of what they were owed. The Pensions Minister said on 19 May that around 34,000 estates may have been affected, with a total value of some £367 million. I hope the Minister will tell us how many estates are now believed to have been affected, how much money remains outstanding and how confident the Government are that they have identified the full scale of the problem.

Behind these large numbers are individual families and executors who suffered real distress. Some bereaved relatives have spent years trying to recover what belongs to them, facing uncertainty and obstruction. As a government-backed savings institution serving more than 24 million people, the fundamental attraction of NS&I products is their security and the fact that the savings are backed by the Government. When NS&I fails to locate customers’ holdings, fails to unite estates with their money and leaves families pursuing claims for years, trust in that important institution is damaged.

I hope the Minister can tell us when the Government first became aware of the full scale of a problem affecting tens of thousands of families, why action was not taken sooner and whether there were earlier warning signs within NS&I that were missed or not escalated. For how long had the defective search process been operating before the failure was identified? I believe that some cases date back as far as 2008. Why did internal and external audit and Treasury oversight fail to identify this earlier? Were there letters from MPs that should have woken Ministers up to the problems facing such a vulnerable group? The departure of the former chief executive, Dax Harkins, and the appointment of Sir Jim Harra, with his long-standing experience at HMRC, are welcome and are clear indications that the Government recognise the seriousness of what occurred.

Turning to the substance of the regulations, we welcome the decision that NS&I will act proactively. However, there is also the important question of funding. The money held in these accounts plainly belongs to the estates. Returning that principal sum is not a new cost to the taxpayer; it is the repayment of money that should never have been withheld. However, compensation, additional interest, professional fees and the administrative costs of identifying and contacting affected estates represent additional expenditure. The Treasury was unable to give the Secondary Legislation Scrutiny Committee an assurance that no further support from the public purse would be required. So I ask a simple question: will NS&I funds need to be increased to meet the extra burden or not? Can the Minister tell us now what the cost of compensation, additional interest, professional fees and the operation of the scheme will be? Will these costs be met entirely from NS&I’s existing budget? If additional funding is required, will Parliament be informed promptly and transparently by the Treasury?

The Government have said that NS&I aims to complete the remediation process during the first half of 2027 and will publish quarterly progress reports. That commitment is welcome, but those updates must contain meaningful, detailed information. The House should also be told what happens if the target of completion in the first half of 2027 is missed. Who will be accountable and what external oversight will there be of the scheme?

In conclusion, these regulations are necessary. Those relying most on NS&I products tend to be those who are less sophisticated financially than perhaps in other ways. In short, the vulnerable have been those most affected. This is an unhappy situation. Hundreds of millions of pounds were not reunited with the estates entitled to receive them. Some bereaved relatives were forced to struggle with NS&I for years and incurred costs simply to recover their family’s own money. We will allow the instrument to pass because delaying remediation would only compound that harm. However, we cannot allow it to pass without demanding accountability and transparency and extracting an undertaking that the Government keep on top of delivery of this vital remediation scheme. I very much look forward to hearing from the Minister, and I beg to move.

--- Later in debate ---

[Baroness Neville-Rolfe (Con)]

My Lords, I am grateful to the noble Baroness, Lady Kramer, for her support and to the Minister for his helpful response. I do not think he answered my question about when the first signs of this scandal first emerged—for example, in MPs’ correspondence. I recognise that that is a difficult question to answer, but I am grateful for the regular reports that he has promised.

I do not wish to delay the establishment of the remediation scheme for vulnerable and bereaved families, which I obviously support. The money belongs to the affected estates, as the Minister said, and must now be returned, together with appropriate compensation and interest. It would therefore not be appropriate to divide the House. The important thing is to proceed with the mediation as quickly and comprehensively as possible. I beg leave to withdraw the Motion.

Motion withdrawn.