In a significant regulatory action, Volkswagen Finance, has been fined £5.4m by the FCA for not treating customers in financial difficulty fairly.
This fine stems from the company’s insufficient efforts to understand and support customers’ individual situations effectively, leading to potentially severe consequences for those affected.
From the start of 2017 to mid-2023, Volkswagen Finance showed a repeated failure in adapting their support to the specific needs of customers facing hardships. Disturbingly, this included instances where cars were repossessed from vulnerable customers without considering alternative solutions, a critical failure given many depend on their vehicles for essential daily activities like commuting to work or managing family responsibilities.
In response to these findings, Volkswagen Finance has agreed to compensate those impacted, with plans to pay over £21.5m to approximately 110,000 customers. This decision follows an FCA supervisory initiative spanning the past four years, which scrutinized how lenders assist borrowers experiencing financial distress. The authority’s efforts have led to over £65m in redress payments to more than 320,000 customers across the sector.
Enhancements to Volkswagen Finance’s approach include a revamped training programme for customer service staff, an overhaul of their communication methods, and the introduction of a new debt collections model aimed at preventing future failings. This comprehensive response not only aims to rectify past shortcomings but also sets a precedent for the industry on the necessity of robust and empathetic customer support systems.
Therese Chambers, Joint Executive Director of Enforcement and Market Oversight at the FCA, emphasized the importance of the issue, stating: “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. 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.”
Volkswagen Finance is currently reaching out to affected customers regarding the redress scheme. They advise customers with any concerns or changes in contact details to reach out through their designated support channels.
The FCA’s proactive enforcement and the resulting actions by Volkswagen Finance highlight a shift towards faster, more focused regulatory interventions, evidenced by the duration of this investigation taking significantly less time compared to the average in previous years.
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