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* 2,000 new cases received each day, down from 3,000
* Ombudsman Ceeney says suspects complaints on "downwardcurve"
* Ceeney says banks have not taken enough care overcomplaints
* Ceeney says sharp rise in complaints on payday lenders
By Matt Scuffham
LONDON, July 29 (Reuters) - Britain's Financial OmbudsmanService is starting to see a decline in the number of complaintsit receives about mis-sold loan insurance but levels remain veryhigh, Chief Financial Ombudsman Natalie Ceeney said.
Britain's biggest banks are expected to this week set asidehundreds of millions of pounds more to compensate customersmis-sold the insurance but Ceeney's comments will raise theirhopes that the worst is behind them.
The industry has already set aside more than 14 billionpounds ($21.5 billion) to compensate customers mis-sold paymentprotection policies (PPI), which were meant to protect borrowersin the event of sickness or unemployment but were often sold tothose who would have been ineligible to claim.
Ceeney said the ombudsman, which steps in where customersand their banks can't reach an agreement, is now receiving 2,000new cases every working day compared with 3,000 at its peak sixmonths ago.
"I think somewhat inevitably the people who care most aboutcomplaining and trying to get compensation do so first. In anycomplaints cycle the numbers rise and you subsequently see themfall. I suspect we're on the downward curve," Ceeney toldReuters in an interview on Monday.
Ceeney cautioned it was difficult to predict future trends.
"Will it fall to 1,000 in six months? I just don't know. Theinteresting thing about PPI is none of us know where it's goingto go," she said.
Despite the ombudsman working with banks to improve theircomplaints handling procedures, Ceeney said 78 percent of caseswere being resolved in the customer's favour.
"We should be seeing uphold rates at 20 to 25 percentbecause banks should know what they're doing now. These are nowso well trodden. When customers do complain it should be handledproperly," she said.
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Barclays is expected to add to the 2.6 billionpounds it has set aside for PPI costs, when it becomes the firstUK bank to report results on Tuesday. Lloyds, which hasset aside 6.8 billon pounds already, the most of any bank, isalso expected to increase its provision on Thursday.
Lloyds ended a contract with Deloitte in June after problemswere uncovered in the way a call centre operated by the businessservices firm handled customer complaints about PPI.
"Too many of the banks have not taken enough care on PPIcomplaint handling. Most of the big banks have outsourced it.The problem if you outsource is that you have to pay hugeamounts of care to make sure your outsourcers are working to theright standards," Ceeney said.
According to figures from Britain's financial regulator, 50million PPI policies were sold and only around 15 percent ofpeople who had the policies have claimed for compensation.
Ceeney also said the ombudsman had seen a sharp rise incomplaints about payday lenders although the numbers remainedrelatively low, which she blamed in part on the stigma felt bythose who had used payday lenders.
