Consumer complaints against banks are expected to soar this year as the beleaguered financial services industry becomes more reluctant to resolve disputes with customers.

The Financial Ombudsman Service (FOS) expects to handle about 150,000 complaints during the next financial year – 25,000 more than this year – as a result of “stressed companies” rejecting customer’s complaints. It added that it will increase its levy to pay for the extra workload.

The warning comes as banks are already facing an increase of more than a third in the levies they have to pay to the Financial Services Authority (FSA), the City watchdog, and the Financial Services Compensation Scheme, which has paid out millions to savers with collapsed Icelandic banks.

Walter Merricks, of the FOS, said: “Complaints are bound to rise in times like these, and I can confirm that this is happening already, and that more complaints are being upheld.

“It is clear that the rise is attributable in part to stressed businesses rejecting complaints they would previously have taken more care to investigate and might have settled.”

The most common complaints received by the FOS include those relating to bank charges, payment protection insurance (PPI), mortgage endowment polices and travel insurance sold with holidays.

Times Money has been inundated recently with complaints from readers about banks not paying compensation to customers who have become victims of fraud, many of which have been taken to the FOS.

The FSA has recently warned firms against cutting back on the resources they devoted to handling complaints from consumers.

Mr Merricks added: “I suspect that the lowered heads and furrowed brows I have seen recently indicate that firms are wrestling with how to comply with the FSA’s complaints-handling requirement – and at the same time make the right calls in managing their businesses through this recession.

“For their employees and their customers, I hope they succeed. Rebuilding trust in financial services requires acknowledging where things have gone wrong and putting them right.”

Dominic Lindley of Which? said: “The Ombudsman's comments illustrate the continuing failure of banks to treat customers who complain fairly. Banks’ reluctance to settle disputes just means more work for the Ombudsman and ultimately a much longer and stressful process for the consumer.

“A lot of cases should not have to reach the Ombudsman – if a bank or lender is in the wrong it should settle the matter quickly and efficiently.

“The FSA needs to step in and look at how companies handle complaints and fine those with bad practice. We also think the Ombudsman should publish information on the companies it receives the most complaints about.”