The UK Financial Conduct Authority (FCA) has fined Volkswagen Financial Services (UK) Limited £5,397,600 for failing to treat its customers in financial difficulty fairly.
Volkswagen Finance has agreed to pay over £21.5m in redress to around 110,000 customers who may have suffered harm because of its failings.
Between 1 January 2017 and 31 July 2023, Volkswagen Finance failed to understand customers’ individual circumstances or to provide support tailored to their needs. This meant that, in some cases, Volkswagen Finance took cars away from vulnerable customers without considering other options. This risked people being put in a worse position, particularly if they relied on their car to travel to work. Volkswagen Finance’s failings were compounded by poor templated and automated communications.
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 £65m 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.
Volkswagen Finance will continue to contact affected customers with details of its redress scheme. Customers do not need to take action before that happens. However, if customers have any questions, would like further information, or their contact details have changed, they should contact Volkswagen Finance using the details provided on its websiteLink is external.
Volkswagen Finance would have been fined £7,710,885.73, but it agreed to resolve these matters and so qualified for a 30% discount.
