Volkswagen Finance has agreed to pay more than £21.5m in redress to about 110,000 customers who may have suffered harm because of its failings.
The FCA found that 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.
The FCA said Volkswagen Finance’s failings were compounded by poor templated and automated communications.
Case studies cited by the FCA include one customer who fell into arrears and explained their complex and worsening physical and mental health difficulties to the lender. They received no empathy, but were “sarcastically” reminded how many days are in a month by VWFS’s agents, according to the FCA.
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In another case, a customer took out car finance but later could not afford the repayments. Volkswagen Finance told them it would cost them £20,000 to give the car back.
The regulator’s work resulted in Volkswagen Finance setting up a redress scheme to compensate affected customers. The firm has since made improvements to its training for customer service staff and communications and 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 past four years to improve the way they treat struggling customers, securing more than £65m in redress for more than 320,000 customers.
Fines have been handed out to HSBC, Barclays, Lloyds and TSB for failures in how they treated customers in financial difficulty.
‘Fine should send clear signals’
Therese Chambers, FCA joint executive director of enforcement and market oversight, 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.”
The firm will continue to contact affected customers with details of its redress scheme – customer don’t need to do anything. However, if customers have any questions, would like further information, or their contact details have changed, they should contact Volkswagen Finance.
Volkswagen Finance would have been fined £7.7m, but it qualified for a 30% discount on the fine as it agreed with the regulator to resolve these matters.
Volkswagen Finance is one of the UK’s largest motor finance providers, offering finance to customers purchasing cars across a range of well-known motor brands, including Volkswagen, Skoda and Porsche.