The City regulator has imposed a £5.4m fine on Volkswagen's º£½ÇÊÓƵ financial services division for its unjust treatment of customers facing financial hardship, which it believes may have resulted in harm.
The Financial Conduct Authority (FCA) announced that Volkswagen Finance has agreed to compensate approximately 110,000 affected customers with over £21.5m following the investigation, as reported by .
From 1 January 2017 to 31 July 2023, Volkswagen Finance repossessed cars from vulnerable customers without exploring other alternatives, according to the FCA.
The authority further stated that this action risked exacerbating the customers' situation, particularly if they relied on their car for commuting to work.
Volkswagen Finance failed to comprehend the unique circumstances of customers or offer support tailored to their needs, the FCA declared.
The regulator discovered that these shortcomings were exacerbated by poor, templated and automated communication.
The FCA highlighted that its intervention led to Volkswagen Finance enhancing its customer service staff training and communication, as well as implementing a new debt collection model.
Volkswagen Finance agreed to address the issues, thus qualifying for a 30 per cent discount, reducing its fine from £7.7m.
As part of its sector-wide review into lenders' support for borrowers in difficulty, the regulator identified these problems. Over the past four years, it has engaged with nearly 100 lenders, securing more than £65m in compensation for over 320,000 customers.
Therese Chambers, the FCA's joint executive director of enforcement and market oversight, commented: "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," She added, "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."
A spokesperson for Volkswagen Finance responded: "We recognise our shortcomings in these past cases and have made significant adjustments over recent years to ensure that we are always delivering the right level of service."
They continued, "We are in the process of concluding our remediation efforts as we continue to provide goodwill payments to affected customers and apologise for any detriment caused."
