In a major regulatory blow, Volkswagen Financial Services (UK) Limited has been hit with a £5.4 million ($7 million) fine by the Financial Conduct Authority (FCA) for mishandling vulnerable customers struggling with financial difficulties between 2017 and 2023.
The UK financial arm of the German automotive giant is also set to pay over £21.5 million in compensation to around 110,000 customers who may have suffered as a result of its actions. According to the FCA, Volkswagen Finance exacerbated tough personal situations by repossessing vehicles from vulnerable customers without exploring alternative solutions.
The regulator’s investigation revealed that from January 2017 to July 2023, the company’s automated and poorly structured communications with financially stretched customers compounded their hardships, often making matters worse. The FCA did not hold back in its criticism, stating, “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.”
Volkswagen Financial Services acknowledged its failings in an emailed statement, saying: “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.”
This hefty fine aligns Volkswagen Financial Services with other prominent institutions that have faced penalties for similar misconduct. The FCA has previously imposed fines on major UK banks such as HSBC, Barclays, Lloyds, and TSB for unfair treatment of customers during financially challenging periods.
Volkswagen’s financial arm now joins this list of offenders, as the FCA continues to crack down on financial institutions that fail to properly support customers in times of financial distress.
For reference, $1 equals 0.7680 pounds.
