The Ombudsman’s annual review for 2015/2016, said some customers that have complained over the past 12 months were so far into mortgage arrears that they were facing repossession. FOS is often helpless in overturning as such cases as repossessions usually happen after a court order.

However, the report revealed that lenders were failing to meet their obligation to respond to customer concerns about repayments constructively. This could include agreeing to repayment holidays, lower repayments or signposting people to free help for debt management.

FOS said that some firms had focused narrowly on one debt instead of taking into account their customers’ circumstances as a whole.

“Some people who contacted us simply hadn’t told the business that they were having trouble. And we sometimes decided there was no way the business could have known. But in a number of complaints, we were able to identify clear signs that there was a problem – and steps that the business could have taken to stop things getting worse,” it added.

Some customers had turned to paid-for debt management services, but saw financial setbacks escalate when charges had been applied and debt failed to fall.

During the 2015/2016 financial year, mortgages made up 3% of all complaints and mortgage endowments at 1%, while payment protection insurance continued to dominate complaints, accounting for 23% of the total.

After falling sharply last year, the number of mortgage endowment complaints continued to fall to 1,938, but remained the second most complained about investment product. Complaints about mortgages have fallen steadily since 2014, when they reached 12,606 to total 11,288 now.

Complaints about rules brought about by the Mortgage Market Review (MMR) also continued to be prevalent, with a particular focus on customers that felt they had been discriminated against for their age.

The Ombudsman said that while it was not illegal or necessarily unfair for lenders to take age into account when assessing affordability, it has been forced continue reminding firms that rigidly applying the rules will not necessarily lead to a fair answer. The report highlighted that in a number of cases, the underlying issue was the lender’s communication, rather than its decision.

These issues were reflected in the proportion of people aged over 65 who referred complaints, which increased over the year. This age group now accounts for 18% of people who use the Ombudsman’s service.