The FSA has warned brokers that they must improve their complaints procedures after a survey found a significant number of firms did not meet regulatory requirements.
The regulator's review found that half of the smallest brokers surveyed needed to improve their complaints handling procedures. Some had no complaints procedures at all.
"This is unacceptable and goes against our principle of fair treatment of customers," said the FSA.
But the regulator did find some positive results. Nearly a third of the brokers surveyed had complaints procedures that exceeded the FSA's requirements, while 78% of firms were informing customers of their complaints procedures at the right time.
The FSA said: "Brokers are aware that this is a key element of treating their customers fairly. However, there are still some areas to be improved. Brokers need to ensure that they tell their customers not only of the course of action open to them, but also, if they do complain, the process that will take place and what action they will take."
The FSA has produced a factsheet to help brokers understand the regulator's rules on complaints handling.
' The FSA warned the insurance industry that it must improve the quality of financial promotions.
The regulator found only limited improvements in the general insurance sector.