Lenders agreed to settle, and the product is no longer being sold, but the cost of compensating people has far exceeded estimates. Banks in Britain have repaid more than 27 billion pounds, or about $35 billion, and set aside at least another £10 billion for customer redress.
The improper selling of payment protection insurance is one of several scandals that have hit the banking industry in Britain since the financial crisis that began in 2008 and weighed on the bottom lines of some of the country’s largest banks, including Barclays, Lloyds Banking Group and the Royal Bank of Scotland.
But this year, the F.C.A. adopted a deadline of Aug. 29, 2019, for the public to submit final claims for compensation and kicked off a two-year education campaign on Tuesday to spread the word.
“We want to encourage people to decide whether to find out if they had P.P.I. and whether to complain or not,” Andrew Bailey, the authority’s chief executive, said in a news release.
The Schwarzenegger ad is part of the campaign. In it, a robotic head of the actor and former California governor follows British shoppers around a supermarket, imploring them to file their P.P.I. claims.
The regulator reportedly set aside £42 million for the overall campaign, which is being financed by firms that sold the insurance.
The campaign is similar to one by the government two years ago to educate the public and small businesses about workplace pensions. Those ads featured a giant purple and blue creature named Workie.
As many as 64 million payment protection insurance policies were sold, mostly from 1990 to 2010, netting banks about £44 billion in premiums. Some claim-management firms, however, say the product was sold to a far larger number of people.
The insurance was marketed alongside all sorts of products, including business and personal loans, mortgages, credit cards and in-store financing.
British regulators determined that the complex pricing and detailed conditions on a buyer’s eligibility to make claims made P.P.I. inappropriate for some consumers.
The amount of compensation claims peaked in 2012, but the pace has not slowed as quickly as the industry had expected, particularly as regulators delayed placing a deadline for claims to be filed.
Claim-management companies, which receive a commission when a person is compensated, have aggressively sought out consumers through cold calls, text messages and ads on daytime television.
As a result, the unexpected number of claims has dragged on quarterly results for banks in Britain.
Lloyds Banking Group, one of the biggest providers of the loan insurance in Britain, took a charge of £700 million as part of its second-quarter results in July. Barclays took a similar £700 million provision in its second quarter.
In the first five months of this year, banks operating in Britain paid out nearly £1.2 billion in P.P.I. compensation claims, according to the F.C.A.
Not everyone is happy with the advertising campaign, however.
Mark Davies, a spokesman for We Fight Any Claim, a claim-management firm, said the regulator should be taking a more direct approach and make banks write to anyone who may potentially have a claim. We Fight Any Claim has gone to court to try to stop the regulator from imposing a deadline on P.P.I. claims.
The point, he said, “is not spend a large amount of money on a Hollywood star. The point about this should be reaching the people you won’t reach, not making noise on television at enormous expenses.”
“That accomplishes little,” Mr. Davies said, “except to burn up the budget that the F.C.A. has allocated.”
‘Do It Now!’ UK Regulator Turns to Animatronic Arnold Schwarzenegger – New York Times