“It has been more than a year of hell,” says Kate Constable about the time it took to claim £46,000 in premium bonds belonging to her late mother.

The process was drawn out because National Savings and Investments (NS&I) rules mean anyone claiming a savings pot of more than £5,000 must obtain probate first.

Constable says her family’s claim took 14 months in total, with probate taking nine months of that. The bank, she says, is “impossible to deal with”, in that the outdated process relies on sending important documents by post.

“They only deal in paper … No one can tell you anything helpful. It’s hugely frustrating. The money is my dad’s inheritance. He has Alzheimer’s and is in a care home. We had to take out a loan to cover his fees.”

NS&I is one of the largest and – until recently, anyway – most trusted savings organisations in the UK. About 24 million people have investments in £1 bonds which are entered into a monthly prize draw, with tax-free winnings ranging from £25 up to £1m.

However, the government-backed bank is under fire after it confessed to long-running problems with the tracing of accounts belonging to customers who had died.

The issue has been blamed on the search process which failed to identify all relevant NS&I products. The errors have left 34,000 bereaved families owed £367m. Others have also spoken out about the long delays, poor customer service and onerous bureaucracy involved in a claim process that relies on form-filling and correspondence by post.

This week, Sir Jim Harra, a former HM Revenue and Customs boss, parachuted in to sort out the mess, promised the problems with its search process were fixed.

However, he admits this new, more thorough process, introduced at the start of this year “takes longer than before, and has, unfortunately resulted in delays to current and new claims”.

Extra work plus the backlog means the response time for a bereavement inquiry is eight weeks rather than the usual fortnight. The ultimate time taken to reach a full settlement depends on the individual circumstances.

Anyone claiming funds has to fill in a form and supply the account details. The bank will also ask for a death certificate, proof of identity and potentially a grant of probate, which official figures suggest typically takes five weeks.

Constable’s claim was slowed down by the need to obtain probate. NS&I’s £5,000 threshold is much lower than big banks and wealth managers, such as Barclays and Hargreaves Lansdown, where it is £50,000. Constable says the tracing issue has compounded customer service problems at the bank.

Bonds are only entered in the prize draw for a year following a customer’s death, meaning no interest is earned on holdings trapped in limbo for longer.

It is not clear exactly what went wrong in the tracing process but experts suggest paper-based premium bonds, or other accounts opened in the 1950s and 1960s, may have been missed.

“We’re seeing the perfect storm of what happens when old data, historic system migrations and a high burden of proof collide,” says Duncan Stevens, the chief executive of the account tracing experts Gretel. “Being over 160 years old, NS&I’s records will have moved through multiple systems and formats.

“A family may be asked to give evidence of ownership of an account they did not know existed, don’t have paperwork for, or where the underlying records contain incomplete or incorrect information.”

One of the most “triggering and upsetting” things for Constable was one of her security questions: the date of her mother’s death. “I must have had to say it 20 times. There must be a better way.” (It is understood that part of the reason for this is to calculate interest payments and for verification purposes.)

Next week, the bank’s staff will contact the first group of families affected by the tracing errors. Payments will be made shortly afterwards, but putting things right is expected to take at least a year.

Peter, from Southport, does not wish to use his real name because he has made a formal complaint and his case is still being investigated.

He says: “Last year, I contacted NS&I with the details of five accounts belonging to my late father that looked to contain a total of about £55,000. They told me none of these existed but another, containing £12,000, did.”

With a long list of firms to contact as he tied up his father’s affairs, Peter did not question what he had been told. It was only after he read about the tracing mistakes that he revisited the statements.

“Of the five accounts, two were dated from 2015 and 2016 so may have been closed, but the others were from 2023, 2024 and 2025 and a statement for the 2025 account arrived in the post after my father had passed away, so was obviously valid at the time he died.”

If all five accounts prove valid, the total outstanding could be more than £60,000 in withheld funds, once interest has been taken into account.

Peter then feared more form filling and legal fees as his parents’ combined estate was subject to inheritance tax.

However, the government has confirmed that any redress payments will be exempt from the inheritance and income tax that would otherwise be due.

Constable says that last week, out of the blue, the money appeared in her dad’s bank account. She had already complained about their treatment and been offered £150 in compensation on the condition she provide evidence of her father’s residential care. “That was the final straw. I said: ‘I’m not sending any more paperwork.’”

Perhaps sensing her frustration, NS&I waived the request and made the payment anyway.

An NS&I spokesperson said: “We sincerely apologise to anyone making a bereavement claim who has not received the customer service that they should expect, particularly at such a sensitive time.”

NS&I apologised for inquiries taking longer than planned due to the backlog of claims. “We have brought in extra staff to support this work to ensure we return to processing bereavement claims in our normal timeframe by autumn 2026.”