Complaints against UK banks remain near record levels

By Huw Jones and Andrew MacAskill

LONDON, May 26 (Reuters) - Complaints against financialservices firms in Britain are at their third highest level onrecord despite a crackdown on bad behaviour by regulators andnew laws since the financial crisis to protect customers frommisselling.

The number of complaints about packaged bank accounts morethan doubled and the complaints about pension plans surged by aquarter, the Financial Ombudsman said on Thursday.

"It's been another year of big numbers," Chief Ombudsman,Caroline Wayman said. "We mustn't lose sight of the lives andlivelihoods behind every complaint."

The level of complaints and number still being upheld arebeing closely watched by Andrew Bailey, the Bank of EnglandDeputy Governor.

He takes up the reins in July at the Financial ConductAuthority (FCA), which regulates sales practices at lenders andBailey said this month that improving culture at banks will be atop priority.

Just four banks, Lloyds, Barclays, RoyalBank of Scotland and HSBC, accounted for 56percent of all complaints.

The ombudsman received 340,899 new complaints in the pastyear, up slightly on the year before, and about double thenumber at the height of the financial crisis.

The ombudsman upheld just over half of resolved complaints.

The complaints undermine claims by Britain's largest banksthat they have reformed after having to set aside more than 40billion pounds to cover lawsuits and fines since the financialcrisis.

About one in every 28 adults in Britain contacted theombudsman to discuss issues with financial service companies.About one in five of those calls turned into a formal complaint.

Payment protection insurance (PPI) continued to top thenumber of complaints by product, an indication of how Britain'scostliest misselling scandal continues to bite.

PPI complaints totalled 188,712 or 4,000 a week and half theombudsman workload, down 8 percent on the prior year.

Complaints about packaged current accounts or fee-payingaccounts at banks jumped 107 percent to more than 44,000, whilecomplaints about payday or short-term, high interest loans, rose178 percent to 3,216.

Packaged accounts typically offer higher interest onin-credit balances, cashback on spending, and mobile phone andtravel insurance.

Last week Britain's Competition and Markets Authority (CMA)proposed measures to make it easier for people to switchaccounts. (Reporting by Huw Jones and Andrew MacAskill, editing by DavidEvans)