Volkswagen to Pay $34.9 Million for Sketchy Lending Practices

A total of $28 million will go to customers in the United Kingdom. The company will also pay a $6.9 million fine to the UK government.

Photo by: Volkswagen

Christopher Smith

By: Christopher Smith

Oct 22, 2024 at 11:30am ET

Add Motor1.com as a preferred source in Google

Comment

Volkswagen Group UK's financial services will pay $34.9 million in fines and redress.
$28 million will be paid to approximately 110,000 UK customers, with $6.9 in fines levied by the Financial Conduct Authority.
In some cases, customers had their car repossessed and then were assessed a repossession fee.

Volkswagen Group's financial division in the United Kingdom will pay over $28 million to approximately 110,000 customers who had trouble making payments and were treated poorly in recent years. In addition, the UK's Financial Conduct Authority (FCA) levied a $6.9 million fine against the automaker, bringing VW's total cost for its financial failings to $34.9 million.

The payout is the result of the FCA's investigation into reports of Volkswagen Finance being either very difficult to work with, or flat-out refusing to work with customers experiencing financial difficulty. Beyond that, FCA identified some cases in which VW levied additional charges against people facing repossessions. One case, mentioned in a report from FCA, highlighted a person who was told he would have to pay "20 grand" and give his car back. FCA's report also identifies multiple instances where individuals experiencing repossessions were charged a fee of €252 ($326).

FCA identified a period from January 1, 2017, through July 31, 2023, during which VW's UK finance group failed to "pay due regard to the interests of those customers and treat them fairly, and [failed] the information needs of those customers and communicate with them in a way that was clear, fair, and not misleading." The 57-page report outlines a largely automated, rigid process that didn't account for special circumstances or provide opportunities for delinquent owners to make up the missed payments.

What do you think?

View

Comments

As part of the agreement with FCA, VW Finance has instituted changes within its network to better address individual circumstances for customers struggling to make payments. These include new processes for collections and better communication on all levels, among other things.

"For many, a car is not nice to have but a necessity for work or for family life," said Therese Chambers, joint executive director of enforcement and market oversight at the FCA. "Volkswagen Finance made tough personal situations worse by failing to consider what those in difficulty might need. It is right it compensates those who suffered. This fine and redress should send clear signals to lenders that they need to properly support those in financial difficulty."

Bad Financial Decisions:

Cobb Tuning Fined Millions by EPA Over Emissions Defeat Devices