The business newspaper City AM ran a story with the headline, “The Terminator delivers £3bn hit to big banks as PPI costs continue to rise”. The headline refers to the Financial Conduct Authority [FCA] PPI deadline awareness campaign that features Arnold Schwarzenegger as the ‘poster boy’ who was meant to create an awareness of the deadline. The article draws on figures produced by New City Agenda which show bank provisions have now cost the banking industry a total of £44.2bn.
The article raises two issues which were not covered:
- How much should be provisioned if consumers are correctly compensated?
- Will consumers receive the amount they are due by the deadline?
The answer to the first question is simple, it is generally accepted that the amount that should be repaid to consumers is £100bn, more than twice the amount already provisioned! The answer to the second question is equally simple – no. Monitoring by the PFCA shows a woeful lack of progress and a failed ‘Arnie’ campaign.
How is the woeful lack of progress quantified?
Firstly, simply only a third of what is due to consumers has been paid out.
Secondly, the payout ‘flight path’ shows the payout amounts are way behind the rate required by the deadline.
Is the ‘Arnie’ campaign failing?
The evidence suggests that although it is easy for a regulator to convince itself that the message is getting across one must ‘ask the people’ to see if it really is. The PFCA recently asked the independent pollsters Populus to update its previous work in this area. Worryingly, 50% of the sample did not know there was a deadline at all and 4 out of 5 UK adults were unable to identify the FCA PPI deadline date. The rest of the survey shows that consumers still need the help of a CMC to support them. The full Populus survey will be published shortly.
So why is the ‘Arnie’ campaign failing?
Firstly, the FCA campaign, although amusing, is not motivating people to respond. What do I mean? The FCA tweeted an infographic for the period from the start of the campaign to the end of 2017 that showed responses to the campaign. For example, along with other data, it showed the FCA had received 16,763 calls and 861 emails. So there was a level comparison I asked a claims management company [CMC] who does not undertake any type of outbound marketing activity and who solely relies on consumers responding to its marketing (like the FCA) how their numbers compared. The CMC received 17 times the number of calls and 70 times the number of emails. Clearly, the CMC marketing campaigns motivate consumers to do something.
Secondly, the message behind the ‘Arnie’ campaign is wrong. It highlights to those who know that they had PPI that there is a deadline to complain. It does not reach those who are still blind to the fact that they might have had PPI. I speak as someone who has only just found out that PPI had been added to a business overdraft in the early 1990’s without my knowledge. I had always thought I had never had PPI on any financial product, but how wrong I was. If the FCA campaign is going to be successful, the message needs to change. It not only needs to motivate those who thought they might have had PPI to investigate if it was mis-sold, it also needs to motivate those in ignorant bliss (like me) that they really need to look at their past financial products to see if PPI was added – it might even be in the documentation (as was the situation in my case).
It is not surprising that some commentators are already calling for the PPI deadline to be extended!