Volkswagen (VW) Finance, the financial services arm of the German car manufacturer, has reached a settlement agreement with the UK`s Financial Conduct Authority (FCA). The agreement will see VW Finance pay £13.8 million to the FCA in compensation to approximately 500,000 customers who were affected by unfair practices.
The investigation into VW Finance began in October 2017 following concerns that the company had failed to adequately disclose commission payments made to motor dealers. The FCA found that VW Finance had failed to provide customers with sufficient information on the commissions paid to motor dealers and as such, customers were not able to make informed decisions about the finance options available to them.
The settlement agreement means that VW Finance will pay compensation to customers who have taken out Hire Purchase agreements with the company between 1 April 2010 and 31 January 2020. The amount of compensation will depend on the individual customer`s circumstances.
The FCA has said that customers who are due compensation will be contacted by VW Finance in the coming months and that they do not need to take any action at this time. Customers who believe they may be eligible for compensation but do not receive a letter from VW Finance are advised to contact the company directly.
VW Finance has said that it takes its responsibilities to customers very seriously and has implemented changes to ensure that commissions are now disclosed clearly to customers. The company has also agreed to pay all compensation due to customers within 90 days of the settlement agreement being finalised.
The settlement agreement is a reminder of the importance of good practice and transparency in the finance industry. Customers have the right to know how commission payments may affect the finance options available to them and should be provided with clear and concise information on all aspects of a finance agreement.
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