Volkswagen Finance fined £5.4m by FCA

The Financial Conduct Authority (FCA) has fined Volkswagen’s UK financial services arm £5.4m for its unfair treatment of customers in financial difficulty. The City watchdog found that between January 2017 and July 2023.

The investigation, Volkswagen Finance took cars away from vulnerable customers without considering other options. The firm failed to understand customers’ individual circumstances and issues were exacerbated by poor communication. VW Finance’s fine was reduced from £7.7 million, with a 30% discount coming after it agreed to resolve the matters.

The FCA says the firm has agreed to pay out more than £21.5 million in compensation to around 110,000 affected customers. The FCA’s work resulted in Volkswagen Finance setting up a redress scheme to compensate affected customers. It has made improvements to its training for customer service staff and communications. It has also introduced a new debt collections model.  

Volkswagen Finance’s failings were identified during the FCA’s supervisory work to assess how lenders support borrowers in difficulty. The FCA has worked with nearly 100 lenders in the last 4 years to improve the way they treat struggling customers, securing over £65 million in redress for over 320,000 customers. Earlier this year, the FCA strengthened protections for borrowers by making measures it introduced during the pandemic permanent. 

Therese Chambers, Joint Executive Director of Enforcement and Market Oversight at the FCA said “For many, a car is not a nice to have but a necessity for work or for family life. Volkswagen Finance made tough personal situations worse by failing to consider what those in difficulty might need. It is right it compensates those who suffered. This fine and redress should send clear signals to lenders that they need to properly support those in financial difficulty.”