Dismal reading - that's the verdict on the report published today by the Financial Services Authority on how banks handle complaints from customers.

The FSA says that as a result of its review five banks are undertaking major changes to the way they deal with complaints and two have been referred for further investigation.

The watchdog found fault from the highest to lowest levels, resulting in "Complaint handling procedures that led to staff issuing multiple, repetitive responses to customers, forcing them to restate their complaint a number of times in the face of ongoing negative responses from the bank".

According to the Financial Services Consumer Panel, "The results of the FSA review of the way that banks handle complaints, published today, are unacceptably poor and make dismal reading.

"It is disgraceful that senior management in many banks are not taking complaint handling seriously and sorting it out. It should be easy for customers to complain. Clearly, this is often not the case.

"The Panel has long argued that the way staff are incentivised in banks works against consumers. This report proves it. While some banks are getting better at complaints handling, others clearly lag a long way behind. This cannot be tolerated."

Adam Phillips, Chairman of the Financial Services Consumer Panel said: "It is no wonder that the banks have objected to recent FSA moves to publish complaints data.

"This FSA report shows that the way banks are handling complaints is lamentable , and can cause real suffering to consumers. Banks will only really change their behaviour when there is no escape from public scrutiny - and there is meaningful information available to show how banks are treating their customers. The FSA needs to take swift and effective action, and to continue its work to ensure published complaints data is as clear as possible."