Volkswagen‘s got a financial mess to clean up—$34.9 million worth. VW’s financial arm in the UK is being held responsible for some shady lending practices, and now they have to pay up. Almost 110,000 people—yeah, that’s a huge number—are getting over $28 million in compensation because, well, they were treated unfairly when they fell behind on payments. It’s not just the payout though. On top of that, the UK’s Financial Conduct Authority (FCA) slapped Volkswagen with a $6.9 million fine. All in all, it’s a steep price for their financial blunders.
The FCA did a deep dive into Volkswagen Finance’s operations, and what they found wasn’t pretty. Turns out, people who were already struggling with payments were hit even harder by VW Finance. Some folks were straight-up ignored or given the cold shoulder when they tried to reach out for help. Imagine that. Instead of working with people, VW Finance sometimes just piled on extra charges, making a bad situation worse. There was even a case in the FCA report where a guy was told he had to fork over $20,000 and return his car at the same time. Like, who’s got that kind of cash lying around?
In some repossession cases, people got hit with a €252 fee (which comes out to about $326). Imagine losing your car and having to pay extra for it—that’s a nightmare. The FCA pointed to a specific time frame—January 1, 2017, through July 31, 2023—when VW’s UK finance group dropped the ball big time. During this period, they didn’t bother to really look out for their customers or communicate in a way that was helpful. They were too rigid, relying on automated systems, which made it tough for people who missed payments to catch up. They didn’t even consider special situations where someone might’ve needed a little more understanding.
But it looks like VW Finance is now trying to turn things around. As part of the deal with the FCA, they’ve made changes in their system to better address the needs of people struggling financially. They’ve supposedly improved their collection processes and communication, but only time will tell how well that works out.
Therese Chambers, who’s pretty high up in the FCA, had some strong words about it. She said something along the lines of, for a lot of people, a car isn’t just a luxury; it’s essential for work or family. She wasn’t happy about how VW Finance handled things and thinks it’s only fair that those affected get compensated. She also hopes this whole situation serves as a wake-up call to other lenders, reminding them to actually help people who are in financial trouble.
Source and Image: Motor1