Volkswagen fined $34.9M for unfair lending practices in UK
Volkswagen fined $34.9M for unfair lending practices in UK
23 Oct 2024
Volkswagen Group UK's financial services division has been ordered to pay $34.9 million in fines and compensation, after an investigation by the Financial Conduct Authority (FCA).
The penalty includes a $28 million payout to around 110,000 UK customers who had trouble making payments, and were unfairly treated during financial difficulties.
The FCA has also imposed an additional $6.9 million fine on the company, taking the total cost of its financial misconduct to $34.9 million.
Investigation reveals Volkswagen's unfair practices
Unfair treatment
The FCA's investigation was launched after it received complaints, regarding Volkswagen Finance's uncooperative behavior toward customers experiencing financial difficulties.
The authority found cases where the company charged additional fees to people undergoing vehicle repossessions.
In one instance, a customer was asked to pay "20 grand" and return his car.
The report detailed multiple cases where people were charged a repossession fee of $326 (around ₹27,400).
FCA report criticizes Volkswagen's rigid process
System flaws
The FCA's investigation spanned from January 1, 2017, to July 31, 2023.
During this period, it found Volkswagen's UK finance group neglected the interests of customers and failed to communicate with them in a clear and fair manner.
The authority's 57-page report slammed the company's mostly automated and inflexible process that didn't account for special circumstances, or provide opportunities for delinquent owners to catch up on missed payments.
Volkswagen Finance implements changes
Reforms initiated
Following the FCA agreement, Volkswagen Finance has made changes within its network to better support customers struggling to make payments.
These reforms include new collection processes and better communication at all levels.
Therese Chambers, Joint Executive Director of Enforcement and Market Oversight at the FCA, said, "Volkswagen Finance made tough personal situations worse by failing to consider what those in difficulty might need."