Consumers taking a dispute to the Financial Ombudsman Service are much more likely to use a claims management company than in the past, according to the FOS annual report. The trend has been attacked by consumer groups, and the external dispute resolution schemes are taking steps to limit the scope of the emerging claims management industry.FOS saw a 59 per cent increase in the number of applicants using dispute resolution agents. "We are concerned about the emergence of a claims management industry similar to that which has developed on a large scale in the United Kingdom," it said.FOS's view is that claims management companies charge fees for providing representation, despite such services being free to consumers. It is also concerned that dispute agents introduce an adversarial approach into what is intended to be a co-operative process.In June, it issued a consultation paper setting out proposed changes to its terms of reference, in which it said it would impose tighter rules on the activities of agents and would stop an applicant using an agent where it felt the agent was being unhelpful.The Credit Ombudsman Service is taking similar measures.FOS disclosed in its annual report that it received 31,680 disputes in the 2013/14 financial year - down two per cent on the previous year. It is the second consecutive year that dispute numbers have fallen.Ninety-four per cent of the 15,234 members did not have a dispute lodged against them. Of the 891 members that did have a dispute lodged against them, 388 had only one dispute and another 152 had only two disputes.At the other end of the scale, there were 51 members that attracted more than 100 disputes and another 19 that attracted between 51 and 100.Credit products accounted for 50 per cent of all disputes (up from 49 per cent in 2012/13), general insurance 27 per cent, payments six per cent, deposits six per cent, investments five per cent, life insurance five per cent and trustee services one per cent.When it came to consumer credit disputes, 39 per cent were about credit cards, 32 per cent about home loans and 18 per cent about personal loans.As in previous years, the most common issue in consumers credit disputes was financial difficulty, although the proportion of disputes about financial difficulty fell from 54 per cent in 2011/12 to 40 per cent in the year to June.FOS said the reduction in hardship disputes was due to improvements in the way financial service providers handled hardship requests and the impact of low interest rates, which have reduced payment pressure.However, problems with policies for dealing with customers in financial difficulty remained the biggest systemic issue. These included lack of formal procedures for dealing with hardship requests, failure to stop collections activity after a dispute had gone to EDR, and inappropriate procedures for dealing with guarantors and borrowers in joint loans who are estranged from the co-borrower. One area where there was a significant increase was disputes relating to guarantees, which rose 12 per cent.The majority