Volkswagen Group's financial division in the United Kingdom has agreed to pay over $28 million to approximately 110,000 customers who faced difficulties in making payments and were treated poorly in recent years. Additionally, the UK's Financial Conduct Authority (FCA) imposed a $6.9 million fine on the automaker, bringing the total cost of VW's financial missteps to $34.9 million.
The compensation follows an FCA investigation into reports that Volkswagen Finance was either extremely challenging to deal with or outright refused to assist customers in financial distress. The FCA also found instances where VW imposed extra charges on individuals facing vehicle repossessions. One case highlighted by the FCA involved a customer who was told he would need to pay £20,000 and surrender his car.
The FCA identified a period from January 1, 2017, through July 31, 2023, during which VW's UK finance group failed to adequately consider the interests of its customers and treat them fairly. The 57-page report detailed a largely automated and inflexible process that did not allow for special circumstances or opportunities for delinquent owners to catch up on missed payments.
As part of the agreement with the FCA, VW Finance has implemented changes to better address individual customer circumstances, including improved collection processes and enhanced communication strategies.
"For many, a car is not a luxury but a necessity for work or family life," said Therese Chambers, joint executive director of enforcement and market oversight at the FCA. "Volkswagen Finance exacerbated personal hardships by failing to consider what those in difficulty might need. It is appropriate that it compensates those who suffered. This fine and redress should serve as a clear message to lenders that they must properly support those in financial difficulty."
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