UK: VW Financial Services fined £5.4m for mishandling customers in financial trouble
More than 111,000 customers are affected.
In a financial faux pas that has landed Volkswagen Financial Services (VWFS) in hot water, the UK’s Financial Conduct Authority (FCA) has slapped the company with a hefty £5.4 million fine. The punishment comes after the company’s less-than-stellar treatment of customers struggling with their vehicle finance agreements. To add insult to injury, VWFS is also coughing up over £21.5 million to make amends with more than 110,000 customers who “may have suffered harm” as a result of the company’s missteps.
So, what exactly went wrong? In a report from the FCA, first unearthed by Autocar, between January 2017 and July 2023, VWFS was accused of dropping the ball when it came to understanding individual customers' circumstances. Instead of offering tailored solutions to those in financial difficulty, the company reportedly followed a one-size-fits-all approach, which often meant simply repossessing vehicles when customers couldn’t make payments. The FCA pointed out that this cold-hearted tactic left many in an even worse bind – especially those who needed their cars to get to work.
According to the report, automated systems and impersonal templated responses made the situation even worse. Picture this: you're struggling to make ends meet, and instead of talking to a human who might understand, you get a robotic reply. The FCA wasn't amused, stating that VWFS “failed to understand customers’ individual circumstances” and didn’t give them the help they needed. Ouch.
Automakers being fined:
The consequences? VWFS left at least 109,589 people in a lurch, and that’s a conservative estimate. Some were already struggling with mental health issues, only to have the stress of losing their car thrown into the mix. Others had to make tough choices between paying off their car debt or covering other essential bills, like rent or groceries. In some cases, cars were snatched away from people who relied on them to keep their jobs.
In response, VWFS issued a statement saying they’ve learned from their mistakes. The company has already forked out over £17.8 million in redress payments, with another few million still on the way. They’ve also revamped their customer service training and introduced a new debt collection model – hopefully one with a bit more empathy.
“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 statement reads.
Therese Chambers, the FCA’s joint executive director of enforcement and market oversight, didn’t hold back, saying, “Volkswagen Finance made tough personal situations worse by failing to consider what those in difficulty might need.” She added that the fine and compensation should be a wake-up call for other lenders. The message? If someone’s struggling, maybe don’t make things harder for them.
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