Lloyds most complained-about UK bank

LONDON, April 15 (Reuters) - Britain's biggest retail bankLloyds received more complaints than any of its rivalsin the second half of 2012, data published by the UK's financialregulator showed on Monday.

The Financial Conduct Authority said overall complaintsacross the industry rose by 1 percent to 3.4 million, driven bya further increase in cases relating to the mis-selling ofinsurance on loans and mortgages.

Complaints about payment protection insurance (PPI)increased by 5 percent compared with the first half to 2.2million, accounting for 63 percent of all cases.

The next most complained-about products were currentaccounts, which received 304,000 complaints, down 6 percent onthe first half.

Lloyds, which is 39 percent owned by the government, soldmore PPI policies than rivals. It received 762,000 complaintsoverall, compared with 427,000 at Barclays and 378,000at Royal Bank of Scotland.

Complaints decreased across all product categories except'insurance and pure protection' which includes PPI.

The level of compensation being paid out on PPI fell duringthe period, however, to 2.9 million pounds from 3.2 million inthe first half, suggesting banks are successfully rejecting moreclaims than before.

The head of the Financial Ombudsman Service, which settlesdisputes where banks and their customers cannot reach agreement,told Reuters in March that the number of PPI claims againstbanks had reached "staggering" levels and would take years topay back.

The policies were meant to protect borrowers againstsickness or redundancy but were often sold to customers who didnot want or need them or were ineligible to claim.