The Credit Ombudsman Service Limited (COSL) has published its 2010-2011 annual report on its operations.

It identified complaints relating to financial hardship, deferred establishment fees, default listings and motor vehicle leases as systemic issues.

The single largest source of complaints was financial hardship: 34% of all complaints it received related in some way to financial hardship, specifically the failure of a lender to agree to a payment variation on grounds of financial hardship.

The underlying causes of the financial hardship complaints were identified as unemployment or reduced income (30%), cost of living, including other debt (21%), followed closely by illness of the borrower or their family member (19%), business failure (14%), interest rate increases (8%), relationship breakdown (7%) and natural disasters (1%).

In about 72 per cent of those cases the borrower had been served with a default notice or the lender had commenced legal proceedings, repossessed the security or issued a notice to vacate.