NS&I: Departmental Minute
Published 17 December 2025
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Contingent liabilities arising from transitioning from a single supplier to a multi-supplier delivery model
1) It is normal practice, when a government department proposes to undertake a contingent liability in excess of £300,000 for which there is no specific statutory authority, for the Minister concerned to present a Departmental Minute to Parliament giving particulars of the liability created and explaining the circumstances; and to refrain from incurring the liability until fourteen parliamentary sitting days after the issue of the Minute, except in cases of special urgency.
2) In 2020, NS&I launched a transformation programme to modernise its operational systems, transitioning from a longstanding single-supplier service delivery model to a multi-supplier model. This transformation has introduced new service delivery partners and redistributed responsibilities including operational and fraud risk profiles across the entire customer journey. The liability to NS&I arises where a customer is compromised through no fault of any of the service delivery partners, or if the responsible supplier (s) cannot be identified. This created Operational Loss and Fraud Loss contingent liabilities.
3) The above process has not been followed on this occasion as NS&I had initially judged these losses as occurring in its ‘normal course of business’, raising cost-effective financing for government by issuing and selling retail savings and investment products to the public. On lengthy review and discussion with HM Treasury colleagues, it was determined that the transition to the new multi-supplier service delivery model has resulted in NS&I taking on liabilities that were previously retained by the service delivery partner under the single-supplier model. This has given rise to the contingent liabilities. NS&I therefore acknowledges that Parliament was not informed earlier and apologises for this procedural non-compliance. Steps have been taken to strengthen internal assurance processes to ensure full compliance with Parliamentary expectations and Managing Public Money.
4) These contingent liabilities are necessary to enable successful implementation of the multi-supplier service delivery model without compromising customer outcomes where no accountable party could be identified.
5) The combined potential lifetime exposure for both liabilities is approximately £2 million, from 1 April 2025 to 31 March 2029, the end date of the longest multi-supplier contract. The exposure for the respective loss categories is £0.4 million for operational and £1.6 million for fraud losses. Actual costs are expected to be materially lower, and some may be recoverable from the suppliers or in relation to fraud losses third parties.
6) If, following the laying of this Minute, a member signifies an objection by writing to me, I undertake to examine the objection and respond to the Member concerned.