Financial Supervisory Authority Imposes Multi-Million Fine on Volkswagen Financial Services UK

The British Financial Conduct Authority (FCA) has imposed a significant fine of £5.4 million on Volkswagen Financial Services UK. The impetus for this action was practices that failed to ensure fair treatment of customers from January 2017 to July 2023. Specifically, the FCA criticizes the company for repossessing vehicles from financially distressed customers without exploring alternative options. This particularly impacted those who rely on their cars for essential journeys, such as commuting to work. In a conciliatory move, Volkswagen Financial Services UK has agreed to compensate affected customers. A compensation package amounting to over £21.5 million will benefit approximately 110,000 individuals. Affected customers will be proactively contacted, and no action is initially required on their part. Therese Chambers, Director of Enforcement and Market Oversight at the FCA, emphasized that for many people, their car is not just a luxury but a necessity. Volkswagen Finance had further exacerbated the already difficult situation of these individuals by neglecting to provide support. The investigation into Volkswagen Finance’s practices lasted 13 months and revealed significant failings, exacerbated by inadequate and automated communication processes. At the same time, the Volkswagen Group has also announced changes in Germany that could potentially lead to job reductions at six German locations. Various employment contracts, which were intended to provide security until 2029, are under consideration.