Why NS&I is falling out of favour

Poor customer service and outdated technology have led to a deluge of complaints about National Savings & Investments. The Treasury-owned bank has 24 million customers and holds £231.3 billion of our savings, but more and more people are disappointed with its service.

It has missed its own customer satisfaction targets for three out of the past four years.

Customers have complained of struggling to get through on the phone, difficulties logging into their accounts and being unable to open new savings accounts. There were 33,655 complaints made about the bank last year, up 37 per cent from 24,569 the year before.

Sam Richardson from the consumer group Which? said: “NS&I is paid for by taxpayers, so it’s concerning to see such poor customer service standards. It needs to up its game to ensure customers are receiving the service they deserve.”

Established in 1861, NS&I is tasked with raising money from savers to fund government spending. It is best known for its Premium Bonds, a monthly prize draw in which savers can win prizes from £25 to £1 million.

A key appeal of NS&I is that all deposits are guaranteed by the Treasury. By comparison, savers are covered up to £85,000 under the Financial Services Compensation Scheme if their high street bank fails.

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But it has tumbled down the rankings, falling to a low of 46th in February last year before climbing to 36ththis year. The bank was given one star out of five in 88 per cent of the 3,496 reviews of it on the website Trustpilot.

The first sign of trouble was during the pandemic in November 2020, when NS&I cut its savings rates to as little as 0.01 per cent, having previously topped the best-buy tables.

A customer service meltdown followed as savers pulled £12.5 billion out their accounts between November 2020 and January 2021 and the bank struggled to cope. Average phone waiting times were as high as 40 minutes. Three of the bank’s executives were subsequently questioned by MPs on the Treasury Select Committee.

Since then a pattern of service problems has emerged, often spiking after rates are raised or accounts are launched.

When NS&I released a market-leading one-year bond paying 6.2 per cent in August 2023, some 225,000 savers rushed to deposit £10 billion. In the weeks after the bond was launched nearly 16 per cent of phone calls to NS&I were abandoned by customers who couldn’t get through.

“NS&I has continued to display a complete lack of understanding as to how the savings market operates,” said James Blower from the comparison site The Savings Guru. “There should be no surprise that they attract such high demand when their rates are good, and that outflows follow when rates are cut, yet it appears to keep getting caught out.”

The bank had previously said it would deploy more staff to tackle these issues, but said the recruitment market for customer service staff was challenging. There are 496 people employed in NS&I’s call centre, although this changes throughout the year in line with peak periods such as March and October, it said.

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Customers have also become disgruntled with the bank’s technology. NS&I introduced a two-factor authentication system in 2022, which sends customers a code when they log in. But customers complained they did not receive codes or were not able to log in. The new system had “a negative impact on customer satisfaction levels” and led to longer phone waiting times, NS&I said in its 2022-23 annual report.

Meanwhile, the bank’s app has been criticised for its lack of features compared with other banking apps. NS&I customers can use the app to see their account details and balance, but not to open new accounts, pay money in, or move their cash. Customers have described it as “very limited”, “poor” and “living in the stone age”, with an average score of 1.4 out of 5 from 2,300 reviews on Apple’s App Store.

“NS&I has always been behind with its technology, which is to be expected as smaller banks are able to move more quickly,” Blower said. “In the past, this was masked by the fact that NS&I’s phone service had previously always been pretty reasonable. You could always talk to someone on the phone.”

NS&I said: “We know there are areas we can continue to improve. That’s why we are transforming our business to provide more choice and flexibility for our customers, including improvements to our app and website.”

NS&I scored a digital services rating of 55 per cent in customer polling by Fairer Finance in February. This is based on customers’ experiences of banks’ apps, websites and online access. That compares with a score of 84 per cent for the challenger bank Chase and 70 per cent for its rival Monzo. The industry average is 60 per cent.

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“Until it looks like things are really improving, I’d say it’s a bank that savers should give a wide berth to unless the rates are impossible to ignore, and put their money somewhere else,” Blower added.

NS&I announced a big shake-up of its services in December. It is replacing the IT consultancy Atos with the rival firm Sopra Steria under a new six-year, £276 million contract to run its customer services. Atos has run back-office operations at the bank since 1999.

The technology company IBM was also awarded a five-year, £112 million contract to improve the bank’s digital services.Its aim is to help NS&I transition to “a digital-first, self-service retail bank”.

Dax Harkins, the NS&I chief executive, said the new model would “significantly improve customers’ experience of NS&I”.

In the bank’s annual report, published in July, Harkins said: “While the majority of our many millions of interactions with customers each year are smooth, there are still some processes where we need to make improvements to meet the standards our customers expect.”