NS&I; withdraws inflation linked savings products
20 July 2010 / by Lois Avery
National Savings and Investments have withdrawn their inflation linked savings products after they proved too popular.
Savers were attracted to the products, which linked their interest payments to inflation, because bank rates are currently so low.
But following a surge of savers requesting the savings option NS&I withdrew the offer saying that sales had “far exceeded” the level they expected.
Commenting on NS&I’s decision Andrew Hagger, of financial website Moneynet said: “With savings rates at painfully low levels, it is no surprise that savers have been attracted to potentially higher returns in the form of index-linked savings certificates.
“No one knows what will happen to [inflation measure] RPI in the future, so it is not possible to say whether index-linked savings certificates will turn out to be a good investment, however at least you knew that you would always maintain the spending power of your savings.
“It is another door slammed in the face of savers who now have fewer options as they desperately seek a decent return on their nest egg.”
NS&I, which is backed by the government, works under rules that state that it must not dominate the savings and investments market.
It has withdrawn both products from the market for new customers and has not set a date for when they might be offered again.
Chief executive Jane Platt said: “NS&I has a unique position at the heart of the UK savings sector and we continue to follow a policy of acting transparently and balancing the interests of our savers, the taxpayer and the stability of the wider financial services market.
“The volume of sales over the past few months is such that our forecasts show we were at risk of exceeding the top end of the range, so we needed to take action to reduce sales.”
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