The Financial Conduct Authority (FCA) said it found “significant issues” with the decisions made and the communication to customers in 16 of the 18 firms it reviewed and was considering whether to launch further actions against “a number of” other firms.

Clive Adamson, director of supervision at the FCA, said: “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.

“I am encouraged that the firms in scope of our review have taken immediate steps to put in place the necessary remedial measures and I expect them to ensure they have robust processes in place to work through the remaining complaints, so that eligible complainants can be paid out as quickly as possible.”

The regulator’s review covered smaller high street banks, building societies, credit card providers and personal loan companies, which together, account for around one million complaints, or about 16% of all PPI complaints.

To date, these firms have paid £1.1bn of the total redress paid out to consumers, which now stands at nearly £12bn, the FCA said.

The FCA also said that the amount of PPI redress paid out in July marks the first time in 2013 that over £500m has been paid out in any one month. The figure stood at £528m, up from £498m in June.

The regulator’s findings among larger firms, including high street banks and credit card companies, will be published at a later date.