In a major regulatory action, Volkswagen Finance was fined £5.4m by the FCA for failing to treat customers in financial hardship fairly.
This fine stems from the company’s inadequate efforts to effectively understand and support its customers’ individual circumstances, and could have serious consequences for those affected.
From the beginning of 2017 until mid-2023, Volkswagen Finance demonstrated repeated failures to adapt its support to the specific needs of customers facing difficulties. Alarmingly, this includes examples of cars being confiscated from vulnerable customers without considering alternative solutions, leaving many people unable to do essential work such as commuting or managing family responsibilities. It was a significant failure considering that we rely on our cars for daily activities.
Following these findings, Volkswagen Finance has agreed to compensate those affected and plans to pay more than £21.5m to around 110,000 customers. The decision builds on the FCA’s supervisory initiative over the past four years to examine how lenders support borrowers in financial distress. The authorities’ efforts have resulted in more than £65 million in compensation being paid to more than 320,000 customers across the industry.
Enhancements to Volkswagen Finance’s approach include revamping training programs for customer service staff, reviewing communication methods and introducing a new debt collection model aimed at preventing future failures. This comprehensive response not only aims to correct past shortcomings, but also sets a precedent for the industry on the need for a robust and empathetic customer support system.
Therese Chambers, Joint Executive Director of Enforcement and Market Oversight at the FCA, emphasized the importance of this issue: Volkswagen Finance made a difficult personal situation even worse by failing to consider the needs of people facing hardship. It is right to compensate those who have been harmed. The fines and relief measures will send a clear signal to financial institutions that they need to adequately support people in financial hardship. ”
Volkswagen Finance is currently contacting affected customers about the redress scheme. Advise customers to contact us through designated support channels if they have any concerns or changes to their contact details.
The FCA’s aggressive enforcement and associated actions by Volkswagen Finance have resulted in faster, more focused investigations, as evidenced by the significantly shorter investigation times compared to the previous year’s average. It highlights the shift towards regulatory intervention.
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