Volkswagen Finance Fined £5.4 Million for Unfair Practices Towards Vulnerable Customers
Volkswagen’s car financing arm has been slapped with a £5.4 million fine by the UK’s Financial Conduct Authority (FCA) for mistreating vulnerable customers, including repossessing cars from them. The financial regulator found that Volkswagen Finance failed to comprehend the individual circumstances of its customers or provide tailored support over a span of six years from January 2017 to July 2023.
During this period, approximately 110,000 customers were impacted by the firm’s inadequate handling of their situations. The FCA criticised Volkswagen Finance for seizing cars from vulnerable individuals without exploring alternative solutions for them. The lack of personalised support was exacerbated by the company’s use of generic and automated communications with its customers.
Therese Chambers, the FCA’s joint executive director of enforcement and market oversight, stated, “For many, a car is not just a luxury but a necessity for work or family life. Volkswagen Finance exacerbated difficult personal circumstances by neglecting to consider the needs of those facing challenges. It is only right that they compensate those affected.”
Volkswagen Finance has agreed to pay a total of £21.5 million in compensation to the 110,000 customers who may have suffered harm due to the firm’s failings. The company has taken steps to enhance its communications, improve staff training in customer service, and update debt collection practices.
In response to the fine and compensation agreement, a Volkswagen Finance spokeswoman acknowledged past shortcomings and highlighted ongoing efforts to provide better service. The company is actively working on remediation efforts, including issuing goodwill payments to affected customers and expressing regret for any harm caused.
The FCA’s crackdown on Volkswagen Finance follows a recent fine of £10.9 million imposed on TSB Bank for similar violations related to fair treatment of vulnerable customers between 2014 and 2020. TSB Bank has already paid close to £100 million in redress to over 230,000 mortgage, overdraft, credit card, and loan customers affected by its misconduct.
This regulatory action underscores the FCA’s commitment to holding financial institutions accountable for their treatment of vulnerable consumers and the importance of providing appropriate support to those facing financial difficulties.