The UK's Financial Conduct Authority (FCA) has fined Volkswagen Finance, a subsidiary of Volkswagen Group, £5.4 million for failing to treat financially distressed customers fairly. Volkswagen Finance is one of the largest automotive financial service providers in the UK, offering loans to buyers of Volkswagen, Skoda, and Porsche vehicles.
The FCA highlighted that between 2017 and 2023, Volkswagen Finance neglected to adequately understand borrowers' circumstances and provide necessary support. Consequently, the company has agreed to compensate approximately 110,000 affected customers, amounting to over £21.5 million.
The FCA criticized Volkswagen Finance for repossessing vehicles from certain "vulnerable customers" without considering alternative options. This action potentially worsened the situation for these consumers, particularly those who rely on cars for commuting to work. FCA's Therese Chambers emphasized that cars are essential for many individuals' work and family life, and Volkswagen Finance's oversight exacerbated the hardships faced by some consumers.
Poor communication practices, including the use of automated and templated messages, compounded the issues for Volkswagen Finance. In one notable case, a borrower who had previously expressed suicidal thoughts received a threatening letter from the company just two weeks later, along with callous remarks from a company agent.
To address these concerns, Volkswagen Finance has initiated a remediation plan and introduced a new debt collection model. The company stated it has made "significant adjustments" in recent years to enhance its customer service.
