Mis-Selling PPI: Lloyds' Customer Complaints Surge 274%

The Financial Ombudsman Service revealed that Lloyds is still at the top of the list for Britain's most complained about bank as complaints surged by a few hundred percent in the last six months of 2012.

In data published on the ombudsman's website, the Lloyds TSB bank received more than 45,000 complaints, which is a 274 percent rise from the first six months of the year.

A bulk of complaints about Lloyds TSB concerned payment protection insurance (PPI) mis-selling with a total of 42,195.

Overall, the UK's largest high-street bank Lloyds Banking Group, which includes the Halifax, Lloyds TSB and Bank of Scotland, received more than 93,000 complaints in the second half of 2012, up from 27,700 in the previous six months.

While Lloyds TSB retained its crown, for Britain's most complained about bank, Barclays and Bank of Scotland followed closely behind with 44,725 and 39,375 respectively.

During the six-month period, FOS reported a record total of 283,251 new complaints, which is a 110 percent increase on the previous six months.

Complaints about PPI made up nearly three quarters of the total for the second half of last year, bringing the total amount of complaints to FOS about PPI to 600,000.

Notably, five financial services groups accounted for 78 percent of all new PPI cases received between 1 July and 31 December 2012, signalling the increased use of claims management companies.

"The number of PPI complaints has continued to increase at unprecedented levels and we are now regularly taking on around 2,000 new cases each day. Over the last year or so, we have geared up substantially to deal with these record complaint numbers and we are now resolving more cases each week than ever before," says Natalie Ceeney, chief executive and chief ombudsman at FOS in a statement.

"However, as the complaint levels show no sign of slowing, consumers are increasingly having to wait longer to get their complaints sorted - with many businesses still continuing to cause unnecessary delays," she adds.

In mid-January this year, IBTimes UK reported that the Financial Services Authority and the banking industry are considering implementing a deadline for PPI mis-selling claims in order to slow down the backlog in disputes and billions of pounds in payouts.

This month, Lloyds Banking Group posted a bigger than expected loss last year after setting aside billions to compensate customers who were mis-sold PPI.

It said its full year statutory loss was £570m ($865m/€662m) after setting aside £3.575bn - including £1.5bn in the final three months of the year - to settle potential PPI claims.