British regulators say their review of smaller firms’ efforts to redress complaints about the mis-selling of payment protection insurance (PPI) are falling short.

The UK’s Financial Conduct Authority (FCA) published a report Wednesday looking at 18 medium and small sized firms currently handling complaints about the improper sales of PPI, which the FCA calls the “biggest issue of financial mis-selling in recent years, and has significantly damaged public trust in financial institutions.” (See Investment Executive, FCA settles with credit card insurers on mis-selling, August 22, 2013.)

So far, almost £12 billion in redress has been paid over claims that these policies were mis-sold to consumers, resolving nearly 11 million complaints. The firms involved in the FCA’s review have paid £1.1 billion of the total redress to consumers.

The FCA says that its review found that while some firms are handling complaints properly, there are still significant issues at other firms. Indeed, it found serious problems with complaint handling decisions and communications to customers at two thirds of the firms reviewed. At these firms, the FCA says that it disagreed with 60% of their rejected cases, and had concerns with the redress offered in 43% of their decisions where they upheld consumer complaints.

One firm has already been referred for enforcement action as a result, and the regulator indicates that it is considering enforcement action in several other cases. In the meantime, the FCA says it is working closely with firms to help improve their complaint handling processes.

The FCA has also been assessing the complaint handling of larger firms, and it intends to publish the findings of those reviews at a later date.

The Financial Services Consumer Panel expressed its disappointment with the results of the review, noting that this is just the latest in a string of disappointing reviews where firms have been found wanting following investigation by the FCA.

“We welcome the FCA’s work to expose the shortcomings of these firms. However, there is clearly a long way to go before some in the industry get the message that they need to act in consumers’ interests,” said Consumer Panel chair, Sue Lewis. “If the supermarkets behaved in this way, we would still be eating horsemeat masquerading as beef.”

Lewis said that the consumer panel is happy that the FCA is taking enforcement action against at least one firm, but she said it also needs to “get tough with the big players.”

“We expect firms to deliver fair outcomes to PPI complainants. In our review, we found that some firms are doing this while it is clear others still have some way to go,” said Clive Adamson, director of supervision at the FCA.