National Savings (Hansard, 18 December 1990)

§ Mr. Maples

National Savings practice is to date repayments at the expected date of receipt by customers. This has also been the date used for valuing the amounts to be repaid or for other rights, such as participation in premium bond prize draws. In this way customers benefit from their savings until the date they are expected to receive their money.

National Savings has now received new legal advice on the regulations governing savings certificates, premium bonds and the National Savings bank ordinary account. This is that repayments should be determined at the date of posting, not the date of receipt.

For premium bonds, National Savings has therefore changed its administrative practice to fit with the regulations without any disadvantage to customers.

For savings certificates and ordinary account, if National Savings had valued the repayment warrants at the date they were posted rather than the expected date of receipt, many customers would have been deprived of their final increments, bonuses and other benefits. These additional payments for savings certificates are estimated at £300 million—this is not a precise figure as over 70 years of transactions are involved. National Savings will not be seeking to recover any of the payments made to customers as the amounts paid to them were in accordance with long-standing practice and customers' expectations.

The Government intend to seek parliamentary authority in the next Finance Bill to validate the payments that have been made out of the national loans fund, the Consolidated Fund and the National Savings bank ordinary deposits. Meanwhile payments in accordance with current practice—which is to the benefit of savers—will continue to be made pending the necessary provisions in the Finance Bill.

For the future, National Savings intends to continue the practice which has meant that customers receive payment as near as possible to the date they expect it. National Savings is considering with its legal advisers what consequential changes should be made to the relevant regulations. Amending regulations will be laid as soon as practicable.

A small number of past customers have legal entitlements to additional payments. First, some customers who had their index-linked certificates repaid at a time that was affected by a fall in the RPI would have received a larger payment, averaging £1.50, if the certificates had been valued at the date of posting. National Savings is sending the extra payments with interest to compensate for delay to all the holders concerned.

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Secondly, some premium bond holders become entitled to an increased prize, or a new prize. This is because under the new legal interpretation of the regulations, some winning bonds were ineligible for inclusion in the relevant prize draws as they should have been treated as having been repaid earlier. National Savings is writing to all new premium bond prize winners. They will be paid their prizes plus compensation for the delay.

The additional amount now to be paid out in premium bond prizes and to holders of index-linked certificates, together with compensation for these late payments, is estimated at £300,000. This will not add to planned public expenditure. National Savings is issuing a press release today giving further details of its current practice and of the consequences of the new legal advice. I have placed copies in the Library.