NS&I. The comfort zone of trust.
NS&I is meant to be the safest place for your money. Last week 37,000 grieving families found its IT meltdown had held up inherited savings.
THE GIST ON NS&I: "The Safest Place to Lose Everything"
What is NS&I?
NS&I is Britain's state-backed savings bank. It has 24 million customers and £240 billion of savings. It's meant to be the safest place your money can be. Last week 37,000 grieving families discovered that was a lie.
NS&I has been around for 160 years and is backed by the Treasury. When you put money in, or your granny gives you premium bonds, you're lending to the British state. It cannot go bust. Your money cannot disappear.
What went wrong?
Behind that guarantee, the house was falling down. It has been running a £3 billion IT modernisation called Project Rainbow, and surprise, surprise, it was four years behind schedule, way over budget and very broken.
When customers died, their savings were meant to be released to their families. Instead it lost track of accounts, delayed payments and withheld premium bond prizes. 37,000 families missed house purchases, had to hire lawyers and pay HMRC fines because they'd been given the wrong information. Complaints doubled, and for years nobody fixed it.
What is the fallout?
The chief exec was sacked yesterday and the compensation bill could reach £400 million, paid by you and me, the taxpayer.
Why does it keep happening?
This is what happens when we confuse the promise that your money is safe with the assumption that the place it's held actually works. The first is so reassuring that we don't check the second. In a comfort zone of assumed competence, no one audits you like they audit a private institution.
NS&I isn't unique. The NHS, HMRC, the Post Office: all hold things essential to millions and all operate in the same comfort zone. The institutions we trust are the ones we hold to account least, and the ones most capable of failing when we need them most. Neglect lets it rot, because it knows no one's watching.
Do you trust state-backed savings more than banks?
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Quick answers
What went wrong at NS&I?
A £3 billion IT programme, Project Rainbow, ran four years late and lost track of accounts, delaying payments to bereaved families.
How many families were affected?
37,000, according to Huw.
How much could compensation cost?
Up to £400 million, paid by taxpayers.
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