FCA fines VW Finance £5.4m for unfair customer treatment

21st Oct 2024 11:13

(Sharecast News) - The Financial Conduct Authority (FCA) has fined Volkswagen Financial Services UK £5.4m for failing to treat customers in financial difficulty fairly, it announced on Monday.

It issued the penalty alongside a redress scheme that would see Volkswagen Finance pay over £21.5m to around 110,000 customers affected by its inadequate practices between January 2017 and July 2023.

The FCA said its investigation found that Volkswagen Finance failed to account for individual customer circumstances and, in some cases, repossessed vehicles from vulnerable customers without exploring alternative solutions.

It said those actions potentially worsened customers' situations, especially for those who relied on their cars for essential travel.

Additionally, the company's use of poor templated and automated communications exacerbated the situation.

In response, Volkswagen Finance had committed to enhancing its customer service training, improving communications, and adopting a new debt collection model.

The FCA said the redress scheme would be communicated to affected customers, who would not need to take any immediate action but could contact the company for further details if needed.

This fine followed the FCA's broader effort to ensure fair treatment of borrowers in financial difficulty, having secured over £65m in redress across the lending sector.

"For many, a car is not a nice to have but a necessity for work or for family life," said the FCA's joint executive director of enforcement and market oversight, Therese Chambers.

"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."

Reporting by Josh White for Sharecast.com.