UK fines VW £5.4 million for confiscating vulnerable people’s cars

Britain’s financial watchdog has fined Volkswagen 5.4 million pounds or about 6.5 million euros. The fine was issued because the German car group’s finance arm confiscated cars from vulnerable people with little warning. Volkswagen Finance must also compensate 110,000 affected customers with 21.5 million pounds or about 25.8 million euros.

According to the Financial Conduct Authority (FCA), the lender failed to understand its customers’ individual circumstances or provide appropriate support between January 2017 and July 2023.

In some cases, this resulted in cars being taken away from vulnerable people, including those who had attempted suicide or aided sick relatives, without considering other options for them.

The watchdog said the lender’s use of poorly drafted and automated communications to target customers made the lack of support worse. “For many, a car is not just a gadget but a necessity for work or family life,” said FCA. “Volkswagen Finance made tough personal situations worse by failing to consider what those in difficulty might need. It is right that it compensates those who suffered.”

Change in approach

Volkswagen Financial Services (VWFS) has agreed to pay 1.5 million pounds in compensation to tens of thousands of customers the FCA says may have suffered harm. VWFS, meanwhile, has improved its communications and staff training and changed the way debts are collected.

According to The Guardian, the vast majority of new cars in the UK are bought using some form of finance, and much of it is offered through “captive” companies owned by carmakers, which tend to be very profitable.

VWFS provides finance across the Volkswagen Group, which includes Audi, Skoda, and Porsche; in 2023, it made profits of 276 million pounds or 331 million euros while funding 400,00 vehicles worth more than 10 billion pounds or 12 billion euros.