London - Britain's Financial Ombudsman Service is to take on 1 000 new staff this year to deal with an unprecedented level of complaints relating to mis-sold loan insurance.
The service, which deals with cases where banks and their customers cannot agree a settlement, said the expansion was in addition to the 1 000 staff it took on last year when it increased its number of case workers to 2 500.
Britain's banks have already set aside more than £12bn to compensate customers mis-sold payment protection insurance (PPI) and are struggling to cope with a backlog of complaints. Some in the industry believe that the final figure could top £25bn.
"It's disappointing that we're still seeing significant numbers of unresolved disputes about mis-sold policies being referred to the ombudsman," Deputy Chief Ombudsman Tony Boorman said on Thursday.
The ombudsman has taken on 385 000 new cases since April 2012, including a record 245 000 new cases relating to the mis-selling of PPI policies, which were meant to protect borrowers who found themselves out of work because of sickness or redundancy but were often sold to customers who did not want or need them.
The ombudsman service is also increasing the fees charged to financial services firms when cases are referred to the ombudsman. The fee will rise by £50 ($80) to £550. Additional fees charged on cases relating to payment protection insurance will be kept at £350.
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