NS&I (National Savings and Investments) offer deposit accounts that are 100% secure as they are backed by the government. By contrast bank deposits are as secure as the bank itself, although savers with UK regulated banks are protected by the Financial Services Compensation Scheme, which guarantees the first £85,000 of an individual’s savings in the event that the bank were to fail.
Until 11 June 2018, NS&I Guaranteed Growth and Guaranteed Income bonds had a maximum investment limit of £1,000,000, making them popular with those with cash savings in excess of the £85,000 FSCS limit that they wanted to see fully protected. Unfortunately, this popularity has been part of their downfall. NS&I have reduced the maximum investment limit for these products to £10,000, stating that this change to the investment limit will allow them to better manage demand. The Guaranteed Growth and Guaranteed Income Bonds only came back on sale on 1 December 2017, and it seems NS&I feel this move will allow them to continue to offer the bonds to savers rather than take them off the market again completely.
This will, however, leave some with larger cash amounts with one less option for their money. Those who have already invested more than £10,000 in Guaranteed Growth and Guaranteed Income Bonds will be able to continue to hold their bonds and renew them at maturity. However, those who are only now looking for a secure home for a large cash deposit will need to consider spreading it across a number of institutions using the £85,000 FSCS limit with each or using a cash service that does this on their behalf.