Banks and financial firms are wrongly rejecting payment protection insurance (PPI) complaints, despite them putting billions of pounds aside aside to pay consumers.

Data released today by the independent Financial Ombudsman Service, which settles disputes between firms and their customers, shows far too many providers force customers to ask it to adjudicate after rejecting their initial complaint. And when that happens, the Ombudsman finds in the consumer's favour 88% of the time on PPI , on average.

This is even though banks have said sorry for mis-selling and have been ordered to compensate customers by the regulator, the Financial Services Authority.

Of the 106,193 new complaints the Ombudsman received over the six months from 1 July to 31 December last year, down from 149,925 new in the first half of the year, 46,700 cases related to PPI.

Most upheld

While PPI complaints are down from 98,632 in the first half of 2011, major firms Barclays, Lloyds TSB, MBNA and RBS/Natwest all had 99% of PPI complaints against them upheld in the consumer's favour, showing they were wrong to initially reject the claim.

Halifax/Bank of Scotland (Hbos) and Black Horse — both part of Lloyds Banking Group — each had 98% of PPI complaints upheld. The group has put £3.2 billion aside to pay PPI claims, the most of any bank.

The data shows the Ombudsman upheld an average of 72% of complaints in favour of consumers across all product sectors, compared to 47% in the first half of 2011, reflecting the impact of PPI cases.

Wendy Alcock, campaigns co-ordinator, says: "It's good to see the number of complaints ending up at the Ombudsman has dropped but this should have plummeted further if banks handle complaints fairly in the first place.

"It's also disappointing to see the overall PPI upheld rate rise to 88% in the months following the new measures being implemented, and shocking that Barclays, Lloyds, MBNA and RBS/Natwest appear to have failed their customers with 99% of cases being awarded against them.

"They must do better if they want to rebuild the trust in the financial services sector."

The Ombudsman expects to receive a record 165,000 PPI complaints in 2012/2013.

Overall complaints

Across all product sectors, MBNA had the highest percentage of complaints upheld by the Ombudsman, at 94%. It was followed by Black Horse and RBS at 93%, then Lloyds TSB at 87%.

Then came Natwest and Barclays, with the providers respectively having 85% and 84% of complaints upheld.

HSBC, which in the first half of the year scored best of the major banks with the Ombudsman upholding just 20% of cases against it, had 80% of cases upheld against it in the second half of the year.

Overall, Barclays received the most complaints at 11,524, followed by MBNA at 9,185. Of the top ten most complained-about businesses, Nationwide had the fewest complaints at 2,513.

The table below shows uphold rates for the big banks and financial firms.

Ombudsman complaints 1 July - 31 Dec 2011

Provider % PPI customer complaints upheld % overall customer complaints upheld
Barclays 99% 84%
MBNA 99% 94%
Lloyds TSB 99% 87%
RBS 99% 93%
Natwest 99% 85%
Black Horse 98% 93%
Hbos 98% 76%
HFC 93% 90%
Santander 91% 55%
HSBC 87% 80%
Clydesdale 57% 57%
Capital One 11% 12%
Nationwide 7% 12%