The firm has agreed to pay over £21.5 million in redress to around 110,000 customers who may have suffered harm because of its failings.

The regulator found that between 1 January 2017 and 31 July 2023, Volkswagen Finance failed to understand customers’ individual circumstances or to provide support tailored to their needs. This meant that, in some cases, Volkswagen Finance took cars away from vulnerable customers without considering other options. This risked people being put in a worse position, particularly if they relied on their car to travel to work. Volkswagen Finance’s failings were compounded by poor templated and automated communications.

The FCA’s work resulted in Volkswagen Finance setting up a redress scheme to compensate affected customers. It has made improvements to its training for customer service staff and communications. It has also introduced a new debt collections model.

Volkswagen Finance’s failings were identified during the FCA’s supervisory work to assess how lenders support borrowers in difficulty. The FCA has worked with nearly 100 lenders in the last 4 years to improve the way they treat struggling customers, securing over £65m in redress for over 320,000 customers. Earlier this year, the FCA strengthened protections for borrowers by making measures it introduced during the pandemic permanent.

Therese Chambers, joint executive director of enforcement and market oversight, said: “For many, a car is not a nice to have but a necessity for work or for family life. 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.”

This enforcement case was opened following the FCA’s supervisory work. The enforcement investigation took a total of 13 months to complete, compared to an average of 42 months for investigations closed in 2023/24.