In one of the largest market sector-specific campaigns in its history, the FSA has launched the third phase of the probe, which will send mystery shoppers to financial providers.

The watchdog is currently exploring ways to improve processes in firms whose practices have already been identified as deficient.

“Improving sales standards in the PPI market remains a key priority”, commented Clive Briault, the FSA’s managing director of retail markets.

The PPI investigation aims to encourage firms to treat customers fairly, he stressed, given that between 20 and 25 million PPI products are currently held in the UK.

To date, ten firms have been referred for enforcement action, including Regency, Loans.co.uk and Redcats, for poor PPI selling practices.

But consumer body Which? protested that “industry measures to give consumers more information will be too little too late”.

They “are no substitute for treating them fairly in the first instance”, protested personal finance campaigner Pula Houghton.

After the investigation, the FSA expects to revise its rules governing the sale and promotion of PPI.

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