UK watchdog fines Volkswagen unit for unfair customer treatment

Volkswagen Financial Services (UK) Limited was fined 5.4 million pounds on Wednesday by the UK’s Financial Conduct Authority (FCA) for unfairly treating financially vulnerable customers between 2017 and 2023. The company will, it announced on Monday, also repay around 21.5 million pounds in redress to around 110,000 affected customers.

The FCA also found that Volkswagen Financial Services took part in practices made worse by the challenges faced by those who are financially stressed. In particular, the company withdrew vehicles from vulnerable customers without looking for alternatives. These failings were further fuel by poorly formatted and automated communications that did not address customers' needs effectively, the regulator added.

'Twisting Britain's arms, so as to bring home an acceptable financial undertaking, Volkswagen Finance made tough personal situations worse by failing to take into account what those in difficulty might need,' the FCA said. 'It is right that it compensates those who went through suffering.'

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Volkswagen Financial Services issued an email comment in response to the ruling. The company said the remediation efforts, which include goodwill payments to customers who were tainted, will soon be concluded. They also apologised for any damage caused during that time.

This is in line with a broader trend from the FCA which has, among others, targeted major banks such as HSBC, Barclays, Lloyds and TSB for failing to treat customers fairly in tough economic times. Emphasising that it is crucial to ensure that companies carry out their responsibility of helping vulnerable consumers during times of difficulty, the regulator has stated.

While addressing these issues, the FCA's actions act as a warning to line up fair treatment and transparency in their dealings with customers as financial institutions.