The financial regulator has warned that some of the biggest banks and insurers are failing to handle customer complaints about endowment mortgages properly.

The Financial Services Authority has written to chief executives of all companies that sell endowment policies saying some are dismissing complaints from customers without proper investigation.

Endowment mortgages, which are based on stock market performance, have been the subject of one of the biggest mis-selling scandals of recent years.

The policies were heavily sold in the 1980s and 1990s as a way of repaying home loans. However, high charges and poor performance mean that up to two-thirds of endowment policies may not pay off the outstanding mortgages.

So far 500,000 people have complained to insurers and banks and received compensation for endowment mortgage mis-selling.

Failure by companies to settle claims of mis-selling have encouraged huge numbers of customers to complain to the Financial Ombudsman Service, the organisation that resolves disputes involving financial products and services.

The FSA points out that the FOS is now upholding a large proportion of complaints that were originally dismissed by the companies that sold the policies.

Clive Briault, managing director of retail markets at the FSA, says this suggests "firms may not be handling complaints properly". "Firms should not manage their own caseloads by allowing an excessive number of complaints to flow through to the FOS," he adds in his letter.

The FSA said it was also concerned that other customers - who did not complain to the ombudsman - may not have had their complaints properly considered. It has identified "inconsistencies" in the decisions of some companies relating to certain types of complaint.

The FSA has already fined two companies for failure to handle complaints about endowment mortgages properly. Allied Dunbar Assurance was fined £725,000 for serious flaws in March 2004 and Friends Provident was fined £675,000 for failures in its procedures.

However, the regulator said that progress had been made by some companies that were taking complaints seriously. The FSA is in talks with a number of companies and will be undertaking further work to test whether companies are handling complaints properly. One of the FSA's key responsibilities is to ensure consumers get a fair deal from financial services providers.

Louise Hanson, head of campaigns at Which?, called for companies to be named if they failed to handle complaints properly.