Almost half the disputes over financial hardship considered by the Financial Ombudsman Service in the past financial year arose because the lender did not respond to requests by a borrower to consider newly straitened circumstances.Philip Field, the lead ombudsman for banking and finance, told the FOS annual conference in Melbourne yesterday that 44 per cent of hardship disputes fell into this category.Disputes over credit increased 26 per cent over the year to June 2012. They represent almost half of all disputes handled by the service.Philip Field, lead ombudsman for general insurance, told the conference that the increase in dispute numbers in the sector was "the elephant in the closet" and was generating a strain on the resources of the service.Field said dispute numbers in insurance increased 18 per cent in the year to June 2012 and increased 25 per cent in 2011, with wrangles over flood and natural disaster claims being only one cause of the rise.Field said the FOS prioritised resolution of disputes over flood claims, with two thirds of those lodged since early 2011 resolved by June this year. Many of these claims, he said, were "extraordinarily complex".