A significant fall in the number of disputes over the way lenders handle approaches from customers in financial hardship has contributed to an overall reduction in complaints received by the Financial Ombudsman Service in the year to June.FOS disclosed in its annual report, issued yesterday, that it received 32,307 disputes in 2012/13 - down 11 per cent on the previous year. FOS accepted 24,100 disputes for adjudication, which was down five per cent on the previous year.The decline comes after three years of increases, which coincided with the introduction of national consumer credit legislation. The new law included a requirement for credit licensees and their representatives to be members of a dispute resolution scheme.FOS said other reasons for the drop included a fall in investment disputes, as the impact of the financial crisis faded. There was also a reduction in disputes related to natural disasters, which, it said, was because of a higher prevalence of flood cover and improved industry practice.The number of disputes concerning financial difficulty fell 22 per cent in 2012/13. FOS said financial service providers now have a better awareness of the issue and have invested in improving their approach to customers facing difficulty.It said industry bodies had worked closely with their members. The Australian Bankers Association released a hardship guide this year and revised the Code of Banking Practice to place greater emphasis on this area. Lower interest rates have also had an impact. While the number of disputes concerning financial hardship fell, it remains an important concern, accounting for 5161 of the 24,100 disputes accepted by FOS in 2012/13. About one third of all disputes involving banks were about hardship.FOS found that credit providers still had policies and procedures that created unnecessary barriers to access - for example, requirements for large amounts of written information. Others had inappropriate requirements where a joint debtor would not agree to or respond to a hardship application from their estranged co-borrower.It found that it was still common for lenders to fail to stop debt collection activity while a dispute with FOS was in progress, and there were examples of misleading and deceptive conduct during the course of debt collection.FOS's lead banking and finance ombudsman, Philip Field, said: "It is still a big issue, but we see a number of changes that are making it easier for people to deal with their banks if they are in difficulty."The majority of FOS members did not have any disputes lodged against them in 2012/13, and, of those that did, most had only one dispute. However, 56 financial services providers each had more than 100 disputes referred to FOS during the year, and another 18 had between 51 and 100 disputes referred (the names of those institutions will be posted on the FOS website today).The majority of disputes were resolved between the financial services provider and the customer.FOS membership fell in 2012/13: the number of licensees was down 11 per cent, to 4885, and the number of authorised credit representatives was down two