MPs have heavily criticised the Treasury over its handling of compensation payments to victims of the Equitable Life collapse.
The Public Accounts Committee (PAC), chaired by Labour MP Margaret Hodge, said the way in which the Treasury had handled compensation was "unacceptable".
The PAC warned that 20% of Equitable Life policyholders – between 200,000 and 236,000 people - might never receive any compensation money at all, mainly because the Treasury has said it may be unable to trace them.
Equitable Life collapsed in 2000, leaving 1.5 million policyholders in the lurch. In October 2010, the government agreed to a £1.5 billion compensation pot, but the PAC says the money is not being distributed as well as it could.
By March 2012 just £168 million had been paid out to policyholders. The PAC believes £500 million should have been distributed by then.
Hodge said: "It is completely unacceptable that more than 10 years after the collapse of Equitable Life so many victims still have not received the compensation they are entitled to.
"Hundreds of thousands of conscientious savers are losing out because of the Treasury's failure to get a grip. It focused on an arbitrary target for making the first payments at the expense of proper planning and this has led to unacceptable delays and spiralling costs.
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"Only 35% of policyholders have received payments despite 72% of the budget being spent."
The compensation scheme is set to close in March 2014, with the Treasury still to make 664,200 payments worth £370 million.
"Unless the Treasury and its administrator, National Savings & Investments, get their act together there is a real risk that large numbers of policyholders will miss out," Hodge added.
The PAC suggested the Treasury should bring forward a publicity campaign it is due to launch in September.