Volkswagen has set aside £725mn to cover costs relating to the car finance mis-selling scandal, marking the biggest figure yet for a car manufacturer and raising the total hit to the automotive industry to more than £1.5bn. Volkswagen Financial Services, the UK financing arm of the German carmaker, said it would take a £725mn provision but added that there remained “uncertainty over the final outcome” of the redress scheme put in place by the Financial Conduct Authority. The multibillion-pound scandal stems from poorly disclosed commissions paid to dealerships when car buyers took out loans.
The financial arm of Stellantis, which owns Vauxhall, Peugeot and Fiat brands, recently said its charge related to the motor finance scandal had increased to £221.3mn at the end of December, from just £37.1mn in 2024. In a filing last month, BMW Financial Services (GM) said it had set aside £611.6mn. The UK financial arm of Mercedes-Benz has set aside about £400mn in provisions to cover the costs of any claims made under the scheme, according to a person familiar with the matter.
The company declined to comment. The disclosures come after the FCA presented scaled-backed proposals in March for a redress programme that it predicted could cost lenders £9.1bn. The UK regulator was forced to partially suspend the scheme due to a legal dispute with lenders and consumer groups, delaying the start of billions of pounds in payments by lenders to millions of British consumers, which the FCA had initially hoped would begin this year.
It leaves the FCA’s redress scheme in the balance, as it risks being abandoned if the tribunal upholds any of the challenges. VWFS said that the final cost could “vary materially” from the current provision. Stellantis Financial Services UK and the UK financial arm of BMW have also warned that “uncertainty” remains over the final cost and timing of payments to customers.
VWFS, Mercedes-Benz Financial Services and Crédit Agricole Auto Finance have appealed against the FCA scheme. “We continue to seek independent clarification from the Upper Tribunal to ensure that any scheme is lawful, fair and properly targeted,” VWFS said in a statement.
Source: Financial Times Companies · Summarized by HeadlinesBriefing