Savers pull a record £6bn from NS&I

FED-UP savers pulled a record £6.2 billion out of nS&I in just one month after the bank slashed interest rates and bungled customer care in the pandemic.

national Savings and Investments (nS&I) haemorrhaged the cash in november as it prepared to cut rates to as little as 0.01 pc, Bank of England figures revealed this week.

It means that the Government’s savings arm is now £3.4 billion short of its annual funding target.

nS&I has 25 million customers, but savers began to withdraw their money after it announced rate cuts in September. The move saw £500 million taken out in October.

But, in november, when the cuts were made, a further £6.2 billion was pulled out.

It also comes after the bank announced plans to stop sending out prizes in the post for Premium Bond winners.

The bank will face further pressure to meet the £35 billion funding target set by the Treasury in July. However, the target has a £5 billion leeway either side of this figure and nS&I has until the end of March 2021 to make up for a shortfall.

Laith Khalaf, of investment firm AJ Bell, says the record withdrawal represented a ‘consumer exodus’. He adds: ‘The scale of the withdrawals does raise the question whether nS&I has over-egged the pudding with its rate cuts.’

However, the bank still has nearly £30 billion more than at the start of 2020.

IT professional Chris White tried to pull his £150,000 Income Bond investment in September, when he found out his interest rate would be cut from 1.15 pc to 0.01 pc.

But technical problems delayed the 61year-old’s move by three weeks. It meant he had to opt for accounts with 0.6 pc and 0.5 pc interest; rather than the 1.1 pc deals he had planned to invest in. Chris, from Tunbridge Wells, Kent, says: ‘It’s disgraceful that nS&I could cut interest so dramatically.’

And nS&I’s decision to axe prize cheques for Premium Bond draws enraged many of its older customers. Scores of readers said that they were unable to register their bank details online or via the phone.

Last month, MPs on the Treasury committee wrote to its chief executive, Ian Ackerley, after complaints rose by 43 pc.

An nS& I spokesman says that its november cuts saw the bank ‘return to a more normal position’ in the sector.