LONDON (Reuters) - Britain's biggest retail bank Lloyds <LLOY.L> received more complaints than any of its rivals in the second half of 2012, data published by the UK's financial regulator showed on Monday.
The Financial Conduct Authority said overall complaints across the industry rose by 1 percent to 3.4 million, driven by a further increase in cases relating to the mis-selling of insurance on loans and mortgages.
Complaints about payment protection insurance (PPI) increased by 5 percent compared with the first half to 2.2 million, accounting for 63 percent of all cases.
The next most complained-about products were current accounts, which received 304,000 complaints, down 6 percent on the first half.
Lloyds, which is 39 percent owned by the government, sold more PPI policies than rivals. It received 762,000 complaints overall, compared with 427,000 at Barclays <BARC.L> and 378,000 at Royal Bank of Scotland <RBS.L>.
Complaints decreased across all product categories except 'insurance and pure protection' which includes PPI.
The level of compensation being paid out on PPI fell during the period, however, to 2.9 million pounds from 3.2 million in the first half, suggesting banks are successfully rejecting more claims than before.
The head of the Financial Ombudsman Service, which settles disputes where banks and their customers cannot reach agreement, told Reuters in March that the number of PPI claims against banks had reached "staggering" levels and would take years to pay back.
The policies were meant to protect borrowers against sickness or redundancy but were often sold to customers who did not want or need them or were ineligible to claim.
(Reporting by Matt Scuffham, Editing by Mark Trevelyan)