Poor debt collection practices, non-compliance with responsible lending obligations and failure to deal appropriately with customers making financial hardship applications topped the list of systemic issues identified by the Financial Ombudsman Service and the Credit & Investments Ombudsman in their annual reviews.A systemic issue is a matter that will have an effect on consumers beyond the parties to a particular dispute.FOS said it was concerned about a number of cases of improper collection activity.In one case a general insurer engaged a law firm to conduct its internal dispute resolution process; the firm was issuing IDR responses on its own letterhead, which FOS felt could have had an undue influence on policyholders.CIO also said there were a number of poor debt collection practices, including undue debtor harassment and the use of non-compliant default notices.Problems with default notices included listing a matter as a serious credit infringement when only a payment default should have been listed, and listing the entire amount of a consumer's loan as being in default, rather than just the overdue payments.CIO said responsible lending was one of the main issues it dealt with during the year.Financial services providers were not seeking meaningful information from consumers about their requirements and objectives when conducting unsuitability assessments.They were not taking account of consumers' actual financial circumstances and not providing staff with proper guidance on complying with responsible lending obligations.Both FOA and CIO reported a fall in the incidence of disputes relating to financial difficulty over the past few years - a result of low interest rates taking pressure off borrowers and lenders doing a better job of managing hardship applications.However, it remains one of the biggest issues the two services face. In one case FOS dealt with, the financial services provider was charging a fee to process a hardship application. Some customers' applications were not considered because they were unwilling or unable to pay the fee. FOS said it was inappropriate to charge such a fee. The provider stopped charging the fee and refunded the fee in a number of cases.