U.K. Says Hasta la Vista to PPI With Schwarzenegger AdsBy
Schwarzenegger’s head is star of ad ending $35 billion scandal
Regulator begins ad campaign for 2019 deadline on PPI claims
Arnold Schwarzenegger’s disembodied head emerges from a supermarket pile of apples, rolls down a stack of paper towels and shouts at shoppers to "Make a decision, do it now!"
The U.K. Financial Conduct Authority commercial -- cheesy or not -- is part of the regulator’s bid to say hasta la vista to a 20-year scandal that’s cost banks 27.4 billion pounds ($35 billion).
The ad aired Tuesday is part of a 42 million-pound campaign to mark the start of a two-year countdown for customers to make final claims over payment protection insurance, known as PPI.
"The firms mis-sold this product on an industrial scale," Megan Butler, the FCA’s head of supervision said in an interview with Bloomberg News. "There are so many cases of people being sold policies that could never have protected them."
PPI is a form of credit insurance if a borrower becomes unable to return the money because of job loss or illness. The product, sold with anything from credit cards to sofas, was given to customers who didn’t want or need it by salespeople pursuing big commissions.
1.5 Million Pounds
The Sun newspaper reported in May that the 70-year-old Schwarzenegger was paid 1.5 million pounds for the 60-second commercial. Mark Lund, Chief Executive Officer of marketing company McCann Worldgroup UK, said using a celebrity helps promote an idea or concept that doesn’t have a clear picture attached.
"Everyone has heard of PPI but there’s no mental image for it," Lund said. "People use celebrities because they already have a place in people’s minds and hearts and Schwarzenegger is clearly a huge name. The plus side is it’s going to get noticed" while the only down side is if the ad appears random.
Lund said he’d be surprised if Schwarzenegger was paid 1.5 million pounds, however, because the commercial features an impersonator rather than the celebrity himself. The FCA declined to comment on the fee to use his likeness.
The regulator introduced the August 2019 deadline after a court ruling opened the door to a possible wave of new claims. In November 2014 the U.K. Supreme Court said Paragon Personal Finance Ltd. broke consumer-protection rules by failing to inform a widowed college lecturer that her PPI policy included large commission payments. The commissions accounted for about 72 percent of the premium.
Before the ruling banks and other financial firms had been compensating customers for the sale of policies consumers didn’t want or need, rather than any out-sized commissions. The judgment meant customers could seek further restitution, potentially costing banks billions of pounds in fresh claims. The FCA has said any commission of 50 percent or more on a premium should be considered unfair.
More than 64 million PPI policies have been sold since the 1990s to 2010, about 12 million of which have been compensated, Butler said at a press conference Tuesday. The bill for the campaign will be paid by the 18 firms most complained about in relation to PPI. More than 36 billion pounds has been set aside by banks including Barclays Plc and Lloyds Banking Group Plc to compensate customers.
“Our campaign aims to cut through the noise on PPI," Andrew Bailey, the FCA’s chief executive, said in a statement. "We want to encourage people to decide whether to find out if they had PPI and whether to complain."
— With assistance by Stephen Morris, and Joe Mayes