National Savings & Investments (NS&I) is facing a major backlog crisis after it emerged that around 37,000 grieving families are still waiting for money left to them by deceased relatives, with more than £470million yet to be paid out.
The controversy has led to the departure of Dax Harkins, who stepped down as chief executive following the fallout.
Former HMRC boss Sir Jim Harra has since taken over leadership at the Treasury-backed savings institution.
Families across Britain have reported lengthy delays involving paperwork, repeated contact attempts and, in some cases, the need to involve solicitors to access funds.
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Pensions Minister Torsten Bell told MPs last month that no money has gone missing and that all affected families will receive the full amounts owed.
One case highlights the difficulties faced by bereaved customers.
Celia Dowell, from Marston Green in the West Midlands, has been waiting to receive more than £18,000 held in Premium Bonds by her late husband Robert, who died from pulmonary disease in December.
Mrs Dowell said other banks released her husband’s savings without significant delays, while NS&I took considerably longer despite receiving all required documentation.
'£470million owed to grieving families' as NS&I faces major backlog scandal
|GETTY/NS&I
She said she was informed on February 25 that the funds would arrive "shortly," but did not receive any further updates.
After contacting the organisation again, she said she was told there was a backlog affecting bereaved families.
"I was just told that there was a heavy backlog for bereaved families," Mrs Dowell said.
"I can't understand why it's taking so long it's like getting blood out of a stone.
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Dax Harkins stepped down the wake of the scandal
| NS&IHer experience reflects the wider delays affecting thousands of families across the country.
NS&I said it has since contacted Mrs Dowell and arranged for the funds to be paid, along with a goodwill payment.
A spokesperson said: "We have spoken to Mrs Dowell and arranged for her late husband's savings to be paid directly to her, as well as agreeing a goodwill payment for the distress and inconvenience it has caused."
The spokesperson added: "We apologise to any of our customers who have had a poor experience and where we have fallen short of their expectations."
NS&I said it is not part of the Government’s Tell Us Once service, which handles updates related to benefits, passports and pensions rather than banking services.
The organisation has previously apologised for wider customer service issues.