Simon Read: Mis-selling claims are a nice little earner for ambulance chasers

The biggest winners from the payment protection insurance mis-selling scandal are ambulance chasers. The firms, which offer to help people with their claims, pocket around 25 per cent of each successful claim they manage.

Using figures published by the Financial Services Compensation Scheme (FSCS) today, I reckon that the claims management firms have therefore cashed in to the tune of almost £15m. And that's money they've taken away from the victtims of the scandal.

More than three-quarters of people claiming PPI compensation do so through a claims company, says the FSCS. With the scheme having so far paid out £77.5m for PPI mis-selling, my back-of-an-envelope calculations suggest the claims firms' cut would have topped £14.5m, which is a lot of cash for people to give away.

Because – and this is the crucial bit – making a claim through the Financial Services Compensation Scheme is free. In other words there is no need to pay someone else to take a claim forward for you.

The claims firms will have you believe that using them will give a victim a better chance of success. But that's not so, according to Mark Neale, chief executive of the FSCS. He says: "Claims management companies take a sizeable part of the possible payout and are no more likely to make a successful claim than consumers can on their own."

The statistics published today appear to back him up by showing that the number of successful claims made by individuals – at just over 83 per cent – is almost the same as for those made by third parties, just under 87 per cent.

Of course there will be some people who say they prefer to get someone else to do the paperwork and send letters for them. That's understandable given how tedious and confusing red tape can be at times.

But with the average PPI payout made through a claims company standing at £4,534, that means a typical firm trousered around £1,133.

Is that good value for filling out a form and sending a letter? I know I wouldn't be happy paying that much.

If you're considering using the services of an ambulance chaser, my advice is to first see how easy it is to take the claim forward yourself. Go to www.fscs.org.uk or call free on 0800 678 1100.

More families have satellite TV than insurance, a report from Aviva said this week. The aim of the report was obviously to sell insurance, but the statistic is a telling indictment of how wrong-headed some people are when it comes to money.

Of course insurance can seem expensive. And, unless you need to use it, it can also seem a complete waste of money. But if you need to claim – whether through illness, theft or whatever – it can prove to be a godsend. Further, without the right cover, a small crisis can quickly become a financial disaster. It's the peace of mind that insurance buys you that can make it worthwhile. I'm not advocating splashing out on all the cover you can get, but I do think that careful budgeting should mean putting the security of your family ahead of being able to watch the latest films or sport.

The problem clearly lies in the fact that many people don't give a thought to their budget or where their money goes. Counting the pennies may seem a little mean-spirited, but it's a necessary precaution in these recessionary days.

A telling report published on Thursday by the debt charity Consumer Credit Counselling Service backs that up. It offered fresh evidence of the precarious financial state of millions of people.

The charity calculated that one in 10 households in the North-east, for instance, spend more than a quarter of their income repaying debts other than mortgages. In the North-west it's 9.5 per cent and in Yorkshire it's 9.1 per cent. Across Great Britain the figure averages out at 8.9 per cent of households.

When you take all debts into account – including mortgages – London tops the over-indebtedness table. In the capital a shocking 9.7 per cent of households are being forced to spend more than half their income repaying debts.

There's no mention in the report of how many of these vulnerable households across the country choose to spend their cash on satellite TV, but clearly those close to a financial disaster need to take a good look at their finances.

Economists predict that hardships will get worse this year and next as the effects of the Coalition Government's cutbacks are felt. And many families will be forced to change their lifestyle to survive. Budgeting properly – and cutting expenses such as TV – could be the first step in beating their debt worries.

s.read@independent.co.uk