Smaller banks such as HSBC, as well as credit unions, have produced some of the worst results in the 2011-12 report by the Financial Ombudsman Service.The report, released yesterday, showed disputes dealt with by the service had increased 19 per cent from the previous year, to 36,099, after a 27 per cent rise in 2010-11.The FOS's Chief Ombudsman, Shane Tregillis, said in a statement that more disputes were being lodged by people in financial difficulties.The report says this suggests more Australians are struggling to keep up their payments. It also notes that as in 2010-11, "many consumers who lodge disputes concerning financial difficulty have made repeated requests for assistance from their financial services provider (FSP) and have experienced long-term financial difficulty"It is not clear that all of the recent rises in dispute numbers reflect more actual disputation. Compulsory licensing and membership of an external dispute resolution scheme under the National Consumer Credit Protection Act has also contributed to the increase in recorded credit disputes in recent years. And more consumers are now aware of the service.Disputes resolved by the service rose 31 per cent, to 25,298, meaning a higher proportion of disputes was resolved.Tregillis said the improved resolution rate "reflects our focus on the importance of early, co-operative resolution, which includes working with applicants and financial firms to reduce the time taken to resolve disputes."Half the service's disputes were about credit products, and the bulk of these involved consumer credit. The FOS also handles insurance disputes and other financial issues.For the purposes of comparison between institutions and sectors, the FOS calculates the likelihood of a dispute coming to the FOS by the number of disputes relative to the financial institution's active accounts.These numbers are dominated by smaller institutions, with the Big Four typically being below the industry median rate for likelihood of a dispute.In consumer loans, the institutions with the greatest likelihood of being in a dispute included Bank of Queensland, the Australian Defence Credit Union, Capital Finance Australia, Mercedes-Benz Financial Services Australia, HSBC and Suncorp Metway. The highest rate was for the ANZ-owned Esanda.In credit cards, those banks that had the greatest likelihood of dispute were HSBC, Macquarie Bank and Citigroup. HSBC also stood out as being the most likely to be involved in payments system disputes. In housing finance, those most likely to be in a dispute included Community First Credit Union, Macquarie Bank, RAMS Financial Group and Bank of Queensland.Those that had lowest reported dispute likelihood included Heritage Bank, ME Bank and People's Choice Credit Union in home loans; Bank SA and American Express in credit cards; and Credit Union Australia in consumer loans.