NS&I to impose new exit penalties

National Savings and Investments (NS&I) is imposing some new exit penalties for customers who want to withdraw money early.

The Government-backed provider said it is changing some of its terms and conditions so that its investments range becomes more consistent and easy to understand.

Children's Bonus Bonds, which will no longer be available from the Post Office from September 20 as previously announced, will be renamed Children's Bonds, and will only be available directly from NS&I, by post, telephone and online.

Currently, parents forgo interest on these bonds only if they cash it in during the first year. But from September 20, NS&I will deduct 90 days' interest from the amount being cashed in if the bond has not reached maturity.

Various changes are also coming into effect from this date which affect NS&I's index-linked and savings certificates.

NS&I will write to savers around a month before the maturity of their investment to find out if they wish to roll over into a new product.

John Prout, retail customer director at NS&I, said: "Today we have announced a number of changes to our fixed-term investments which will apply to investments renewed from 20 September 2012.

"None of these changes impact customers until the end of an investment term. Even then we believe the changes will be of limited impact for most people, and they need to take absolutely no action before they receive a maturity letter.

"We are working very hard to ensure that we provide clear and timely information, and when customers receive their maturity letters it will be important for them to familiarise themselves with the details of the changes."

Sylvia Waycot, spokeswoman for consumer website Moneyfacts, said the changes sent out a "confusing message" to savers. She said: "The lack of new investment opportunities in this announcement will be a huge disappointment to many savers who long for the safety net they feel NS&I provide."