Endowment firms have been forced to pay compensation to more than 100,000 customers whose mis-selling complaints had previously been rejected.
Endowment complaints are being dealt with more quickly, says the FSA
The Financial Services Authority (FSA) says that due to its pressure, 75% of the rejected claims have so far been decided in favour of the customers.
As a result they have received an extra £120m in compensation.
The FSA has been worried that too many people have had their compensation claims unfairly turned down.
The regulator has been looking at the issue because of concerns that banks and insurance firms which mis-sold the investment policies have been too ruthless in rejecting compensation claims or offering amounts that are too low.
Vernon Everitt of the FSA warned that the regulator would still keep a close eye on how the firms were operating.
"It is encouraging that firms have improved the speed and quality of how they handle complaints," he said.
"News of a potential shortfall is a major worry for consumers and firms owe it to them to deal with their complaints quickly and fairly.
"They need to pay particular attention to helping people deal with shortfalls when policies mature," he added.
Since 2000 the FSA has fined ten firms a total of £14m for mishandling their endowment complaints process.
Since the process started for compensating victims of mis-sold endowments, 1.8 million people have received monies amounting to £2.7bn.
Long running saga
The problem of mis-sold endowment policies has been one of the biggest scandals to affect the UK financial services industry.
Millions of the policies were sold in the 1980s and 1990s, typically as a method of repaying mortgages, often with unsubstantiated claims that they were guaranteed to pay off the customers' home loan.
In reality, most are likely to fail to do so due to worse than expected investment returns.
Since July 2005, the FSA has been taking a closer look at the procedures of 52 firms which accounted for 90% of all the endowments mortgages that have been sold.
Its action was prompted by reports from the Financial Ombudsman that it was having to deal with thousands of customers complaining that their claims for compensation were not being dealt with fairly.
The FSA says it was worried about 22 of the firms it supervised and in the end demanded that 14 of them take remedial action to improve the way they dealt with compensation claims.
The result has been that 75% of previously rejected claims have now been agreed in the customers' favour.
The claims are also being dealt with more quickly.