NS&I forced to pull saving bonds from the market

The National Savings and Investments (NS&I) operation has today been forced to pull a 3.95% one-year savings bond due to a raft of complaints from UK banks and building societies. The company has also been forced to pull a 4.25% two-year savings bond which was only released on 26 October with rivals citing an unfair advantage for the government backed financial institution.

This is not the first time that the NS&I has courted controversy because of significantly better savings rates compared to those available on the high street. Only last week we saw Nationwide release a very disappointing set of figures and confirm it had lost a massive £6 billion in savings outflow in the first six months of 2009. While there's no doubt that NS&I has helped to inject more competition into the savings sector it is difficult to justify squeezing the life out of UK banks and building societies at a time when they need to be built up.

While some savers will be disappointed that these particular bonds have been withdrawn from the market there is a need to ensure that all companies in the financial sector are operating on a level playing field.