FCA Fines Volkswagen Finance £5.4m for Failing to Treat Customers in Financial Difficulty Fairly

The UK's Financial Conduct Authority (FCA) has fined Volkswagen Financial Services (UK) Limited (Volkswagen Finance) £5.4 million for serious failures in how it treated customers facing financial hardship. The FCA found that Volkswagen Finance repeatedly fell short in fulfilling its obligations to support vulnerable consumers during times of personal financial difficulty.

The FCA found that between January 2017 and July 2023, Volkswagen Finance repeatedly failed to understand its customers' individual circumstances or provide tailored support. In some cases, this resulted in the company repossessing vehicles from vulnerable customers without properly considering other options, which risked putting them in an even worse financial position.

Volkswagen Finance's poor practices were compounded by ineffective communications, with the FCA citing the use of "poor templated and automated communications" that did not adequately address customers' needs.

As part of the enforcement action, Volkswagen Finance has agreed to pay over £21.5 million in redress to approximately 110,000 affected customers. The company has also made improvements to its staff training, communications, and debt collections processes.

"For many, a car is not a nice to have but a necessity for work or for family life," said Therese Chambers, Joint Executive Director of Enforcement and Market Oversight at the FCA. "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."

The fine and redress scheme serve as a strong message to lenders that they must properly support customers facing financial hardship, according to the FCA. This enforcement action is part of the regulator's broader efforts to drive up standards in how firms treat vulnerable consumers, having secured over £65 million in redress for more than 320,000 customers across nearly 100 lenders in the last four years.

The Volkswagen Finance case is also notable for the speed with which the FCA completed its investigation, taking just 13 months compared to an average of 42 months for cases closed in 2023/24. This reflects the regulator's focus on acting more quickly and decisively to address consumer harm.

Volkswagen Finance, one of the UK's largest motor finance providers, has been in contact with affected customers about the redress scheme. The company has urged any customers with outstanding questions or changes to their contact details to reach out directly.

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