KATIE MORLEY INVESTIGATES

I’ve got £1m in cash but NS&I is holding it hostage after my bond was rolled over YOUR CONSUMER CHAMPION

Dear Katie

QIn 2015 I put most of my savings into an NS&I Guaranteed Income Bond (GIB) paying 2.5pc interest. This was a five-year bond that could be terminated early with a penalty of 90 days loss of interest. So effectively, it was an instant-access account, which suited me well.

The bond matured in November 2020, before which NS&I gave me notice that in the absence of my instructions the bond would “roll-over” and be reinvested in another GIB of the same duration, but with a lower interest rate of 1.6pc. The notice letter also stated that my right to cash in the bond early had been withdrawn. Any new GIB, therefore, would be a very different and far more restrictive product to the old one. Instead of being in effect a call account, it would be a fixed-term investment, which would lock my money away for five years.

Around the time the bond matured I was preoccupied with looking after my husband, who was quite ill. Consequently, I inadvertently overlooked the maturity deadline and my bond was rolled over. In August 2023 I applied to NS&I to cancel the new GIB as I needed the money to help my son buy a house. But my application was refused. On Sept 20 it sent me a dismissive letter, which I did not receive until Oct 2. I wrote twice to the chief executive of NS&I and received another dismissive reply. Because of NS&I’s refusal to let me have my money, my son lost his opportunity to purchase the house.

This rolling-over took place without any positive action on my part and I feel this is the essence of inertia selling. I feel it was a misrepresentation by NS&I to market this fundamentally different product under the same name as the old one, and it was deceptive to facilitate reinvestment by inaction. The proceeds of a maturing bond or other fixed-term investment should be put into an instant-access holding account, pending instructions from the client.

I would be most grateful if you could assist me in this matter. I believe the practices of NS&I, as an agency of HM Treasury, should be above reproach.

Dear Reader

AYou say your husband was struck down by Covid, causing you to miss the deadline by which you needed to move your money if you wanted to avoid the roll-over. I asked whether he’d been seriously ill in hospital, to which you replied no, but he had been rather poorly in bed for two weeks. This can’t have been fun, but unfortunately, I don’t think it warrants NS&I making special allowances for you because of “extenuating circumstances”.

However, your main gripe with NS&I is that you feel it has used a trick called inertia selling to send your cash into a completely different product altogether, where it was locked away for five years.

On principle, I agree with you that the way NS&I put the onus on you, the saver, to actively move your money if you didn’t want it locked up in a bond for five years, was downright irritating.

That said, there were plenty of opportunities for you to take action to prevent it from happening. You were sent two letters by NS&I ahead of maturity, both of which contained extremely clear warnings about the change of terms, one of which you have admitted to reading.

I asked NS&I to see this letter so I could see how it had presented this key information. It was high up on the page in a box with the words “important information” in larger, bold font. I’m not sure NS&I could have made it any clearer.

It also offered a 30-day cooling off period in which you had the chance to cancel the new bond. However, you did not take advantage of this either.

Another crucial point for consideration is the sum of money in the bond. When it matured in 2020 it was worth £1m, and it represents the vast majority of your worldly money, although you also have £50,000 in Premium Bonds. I find it astonishing, therefore, that you failed to pay closer attention to the letter. I asked about your son and how much you were planning to give him. You told me he was now in his fifties, already a homeowner, and you were planning to gift him £500,000 to buy a home he could eventually retire into. You didn’t say what you would do with the remaining £500,000 if released from the bond, but as interest rates have risen sharply there are many more attractive deals around than the 1.6pc bond your £1m is stuck in. I know this is frustrating, but I’m afraid there is nothing more I can do. I hope you won’t take this the wrong way, but after this rather expensive blunder, I wonder whether seeking advice from a financial professional before the bond reaches maturity, might pay off in the long run? A spokesman for NS&I said: “We are sorry that the customer is unhappy with our response to her complaint. The terms and conditions for fixed-rate Guaranteed Income Bonds were amended in 2019 to bring NS&I in line with much of the rest of the fixed-term savings sector. We include details of the changes in our maturity letters, reminder correspondence and statements to ensure customers are fully informed of their options, along with details of the 30-day cooling off period available to them.”