VW has been fined £5.4 million for treating vulnerable car finance customers in the UK badly
Volkswagen has to pay £21.5 million to 110,000 customers after taking their vehicles without enough warning. They are also fined £5.4 million for not treating customers fairly. This includes cases where they repossessed cars from people who had tried to commit suicide or were caring for sick family members.
The UK’s financial regulator, the Financial Conduct Authority (FCA), stated that many customers were harmed by the unfair actions of Volkswagen Financial Services (VWFS), which is owned by Volkswagen.
Most new cars in the UK are bought through financing, often from companies owned by carmakers. Companies like Ford, Stellantis, and Volkswagen are big lenders in the UK and usually make a lot of money. VWFS provides financing for the Volkswagen Group, which includes Audi, Skoda, and Porsche, and made £276 million in profit in 2023 while funding 400,000 vehicles worth over £10 billion that year.
The FCA found many problems with VWFS after looking into how they treated customers who were having financial difficulties. This investigation covered the time from 2017 to July 2023, including during the Covid pandemic and the cost of living crisis, when many families faced serious money issues that weren’t their fault.
The FCA is also investigating complaints that car dealers charged customers too much.
In the UK, lenders must treat customers fairly when they say they can’t make payments. However, VW’s actions made things worse for customers who were already stressed, causing anxiety and taking away cars from people who needed them for work.
One example shared involved a parent who reported that a customer tried to take their own life due to stress and money problems, along with issues related to child custody. The parent said VW’s actions made things harder, including sending a threatening letter just two weeks after the suicide attempt.
Some agents showed a “lack of empathy” during phone calls. One even sarcastically reminded a customer how many days were in a month, while another connected him to departments that couldn’t help. VW only recognized the customer’s vulnerability after he reached out for help for 11 months.
Another customer asked for some time to deal with a divorce while isolating during the pandemic and caring for a relative with cancer. The FCA noted that VWFS didn’t respond meaningfully to this request.
VWFS avoided a larger fine of £7.7 million by cooperating with the investigation and has started using a new way to collect debts.
Therese Chambers, a director at the FCA, stated that for many people, “a car is not just a luxury; it’s essential for work or family life.”
“Volkswagen Finance made people’s tough situations worse by not thinking about what those struggling might need,” she said. “It’s important that they pay back those who were harmed. This fine and compensation should show lenders that they need to help people who are having financial problems.”
A spokesperson for VWFS said, “We admit that we didn’t do well in these past cases and have made important changes in recent years to provide better service.
“We are finishing up our efforts to fix things and are still giving goodwill payments to affected customers. We apologize for any harm caused.”
Published: 22nd October 2024
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