The UK’s Financial Conduct Authority (FCA) has hit Volkswagen Financial Services with a substantial fine, after the company failed to treat customers in financial difficulty fairly.
An FCA investigation into VW Financial Services found that between 2017 and 2023, the company “failed to understand customers’ individual circumstances or to provide tailored support for their needs”. As a result, it says, VW took cars away from vulnerable customers without considering alternative courses of action that may have been in the best interest of those customers.
According to the FCA, VW’s actions risked putting people in a worse position, especially if they relied on their cars for getting to work. It says VW’s failings were made worse by poor communications with customers, some of which were automated.
Therese Chambers, joint executive director of enforcement and market oversight at the FCA, says the fine was dished out because “VW Finance made tough personal situations worse by failing to consider what those in difficulty might need.” Chambers also said it is right that VW Finance has put measures in place to compensate those who suffered – the car maker’s finance arm is expected to have to cough up £21.5 million in payments to around 110,000 customers who the FCA says may have suffered harm through VW’s failings.
According to the FCA, VW will itself contact affected customers with details of its redress scheme. VW Financial Services says it “recognises shortcomings” and that it has made significant adjustments in recent years as a result of the ongoing FCA investigation.
The investigation itself took 13 months to complete, and the FCA says VW would have faced a stiffer fine of close to £8 million, had it not agreed to resolve the matter and qualify for a 30 per cent discount.
VW Finance is one of the UK’s largest providers of credit to drivers, across brands including VW, Skoda and Porsche.