By Huw Jones
LONDON, Jan 30 (Reuters) - Britain's markets watchdog willcollect evidence on whether consumers mis-sold loan insuranceare being compensated properly, after lenders have paid out 17.3billion pounds ($26 billion) already in the country's costliestfinancial scandal.
The policies, known as Payment Protection Insurance or PPI,were meant to protect borrowers in the event of sickness orunemployment but were often sold to those who would have beenineligible to claim.
The Financial Conduct Authority (FCA) said it would use itsfindings, due to be published in the summer, to assess if thecurrent approach to compensating customers is working properly.
"The FCA will then consider whether further interventionsmay be appropriate, which could include a consumer communicationcampaign; a possible time limit on complaints; or other rulechanges or guidance, or whether the continuation of the PPIscheme in its current form best meets its objectives," the FCAsaid in a statement on Friday.
"While this work continues, the FCA expects firms tocontinue to deal with PPI complaints in accordance with ourrequirements," the watchdog added.
The FCA board decided on Thursday to review how compensationis being paid given that lenders have been dealing withcomplaints for several years.
Banks such as Lloyds, Barclays, HSBC and Royal Bank of Scotland have already setaside 24 billion pounds to compensate consumers.
The FCA said that since January 2011, banks have handledover 14 million complaints over PPI and have paid compensationon more than 70 percent of those complaints.
Consumers who believe they were mis-sold a PPI policy shouldcontinue complaining to whoever they bought it from and to theFinancial Ombudsman if they are not satisfied with the response,the FCA said.
The Financial Ombudsman said on Tuesday the number ofcomplaints about loan insurance fell in the fourth quarter of2014, but were still running at around 4,000 a week.
($1 = 0.6641 pounds) (Editing by David Holmes)
Barclays (BARC)
Lloyds (LLOY)
HSBC Holdings (HSBA)
