How did it take 3 months to get back the £50,000 I had invested in Premium Bonds?

ONE of the major attractions of owning Premium Bonds – apart from the chance of winning a monthly prize of between £25 and £1million – is that you can get back your money within eight working days. Or so I thought before recently attempting to withdraw my maximum holding of £50,000. Having to wait a few days extra might have been understandable as a result of lockdown, but the whole process took more than three months. Enough to try the patience of a saint – let alone that of a financial journalist.

Easy access was important to my wife Helen and me, as we had earmarked our hard-earned £50,000 nest egg for a more permanent home in an equitybased investment bond – a form of investment that allows you to take an income of 5 per cent a year with tax deferred, while also offering the prospect of capital growth.

This seemed more attractive than the prize fund from NS&I’s Premium Bonds, which equates to an interest rate of 1.4 per cent a year for someone with average luck. My return didn’t exceed this average. And, although enjoying regular £25 monthly taxfree prizes was fun for a while, the thrill soon wore off once it was clear that winning a bigger prize was as unlikely as Helen and I travelling to the moon aboard Virgin Galactic.

In any case, the holding, taken out in January 2018, had only been meant as a temporary home until world stock markets, which had attained worryingly high levels at that time, had corrected. Being able to access the money at short notice was key to this strategy as it was essential that I did not miss the boat if equities plunged and then bounced back.

Though I did not act when the pandemic and lockdown came into force in March, by midMay I felt ready to make my move. But NS&I thwarted me. Despite receiving my form to disinvest on May 19, it did not pay the sale proceeds into my bank account until August 21.

True, the UK’s FTSE100 and FTSE250 stock market indices were standing at similar levels on August 21 as they had been when I should have received the funds. But I had missed out elsewhere.

The MSCI All-Country World Index, which tracks stocks from 23 developed and 26 emerging market countries, had risen by 12 per cent during this period. US technology stocks had performed even better with the Nasdaq Composite Index gaining 19 per cent.

The exact cost of my not being in the markets is unknown as I had not finalised my investment fund selection. But we’re talking several thousand pounds. Trying to contact NS&I during the ordeal proved excruciating, with calls to its helpline involving half-hour waits. When I did get through, the resulting conversations shed no light on the reason behind the delay.

Only the day before receiving my money did I learn from my complaints handler that it had been ‘caused by operating error’. The latest NS&I complaints data – covering the period from April to October this year – will not be published until deep into autumn, so it is not clear whether my experience is part of a broader pattern during lockdown. But any Premium Bond investors hoping to get their money in a hurry should clearly factor in the chance of significant delays.

NS&I says my case is unusual and insists it is not aware of any particular issue with regards to Premium Bond withdrawals. Nor is it clear whether delays affect holders of its Income Bonds (1.15 per cent), Direct Isa (0.9 cent), Direct Saver (1 per cent) or Investment Account (0.8 per cent), all of which say they are nonotice, no-penalty accounts.

But it does acknowledge that Covid-19 has resulted in it operating with fewer staff than normal.

Spokesman Chris Dowsett says: ‘We are continuing to bring in more staff and add new office space to both our frontline and back-office operations to help our customers.

‘However, our contact centre capacity remains reduced and we are seeing very high demand and high call levels.’

At least NS&I’s complaints procedures spared me the hassle of taking my case to the Financial Ombudsman Service, which adjudicates on unresolved disputes between financial companies and their customers.

On August 20, my complaints handler informed me I would be receiving compensation within three working days – although it took more than twice as long.

Compensation from NS&I is based on the facts surrounding each individual case, which means there are no hard and fast rules as to what anyone will be awarded. But mine amounted to the not inconsiderable sum of £956.51.

I accepted this – together with the sincere apology that arrived through the post – with good grace. It was reasonable recompense for the time wasted and mental anguish endured over the three months of dealing with a business that didn’t want anything to do with me.

But whether it adequately compensates for our investment losses as a result of being out of the market when I wanted to be in it is another matter.