8:36 am, October 22, 2024
The Financial Conduct Authority (FCA) has slapped Volkswagen’s car finance wing with a £5.4m fine for failing to treat ‘vulnerable’ customers fairly.
The watchdog found the German outfit guilty of several failures – including taking cars away from vulnerable people – following a 13-month investigation.
It found that lender ‘failed to understand its customers’ individual circumstances or to provide tailored support’, over a six-year period between January 2017 and July 2023.
As a result of the probe, Volkswagen Finance will also now be made to pay £21.5m in compensation to around 110,000 affected customers.
The FCA’s investigations found that VW not only took cars away from vulnerable people without considering other options for them, but then compounded the issue by using ‘poorly templated and automated communications’ to engage with customers.
Therese Chambers, the FCA’s joint executive director of enforcement and market oversight, said: ‘For many, a car is not (just) a nice thing 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.’
The car finance firm would have been fined £7.7m but it qualified for a 30% discount because it agreed to resolve the issues identified by the regulator.
It has since made improvements to its communications and how customer service staff are trained, as well as updating the way it collects debts.
A spokeswoman for Volkswagen Finance said: ‘We recognise our shortcomings in these past cases and have made significant adjustments over recent years to ensure that we are always delivering the right level of service.
‘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.’
The case is the latest example of the FCA cracking down on car finance, as its probe into the mis-selling of finance deals rumbles on.
The regulator is also currently conducting a ‘competition market study’ which is reviewing whether drivers are getting a fair deal when borrowing to pay for vehicle insurance.
