Volkswagen takes £725m hit from motor finance scandal
The finance arm of Volkswagen has taken a mammoth hit from the motor finance scandal plunging it to a loss for the year. Volkswagen Financial Services UK (VWFS) set aside £725m for expected expenses under the City watchdog’s industry-wide car finance redress scheme, according to new account filings. The provision swung the firm to a [...]
Volkswagen Financial Services UK (VWFS) has faced a significant £725 million hit due to the motor finance scandal, according to new account filings. This provision has resulted in a £352.9 million loss for the company in 2025, contrasting with a £110.3 million profit in the previous year. The loss was primarily due to VWFS setting aside £725 million for expected expenses under the City watchdog's industry-wide car finance redress scheme.
The loss was caused by the company's provision based on the criteria set out in the Financial Conduct Authority's (FCA) policy statement. However, VWFS has expressed concerns that the rules do not sufficiently address the specific elements of the scheme's application to captive finance providers. The finance arm of Volkswagen, along with the finance arms of Mercedes Benz and French-owned CA Auto Finance, have initiated legal action against the FCA's redress scheme, arguing that it assumed most customers suffered a financial loss due to undisclosed commissions.
The Supreme Court recently partially overturned a landmark ruling on car finance deals, rejecting claims that hidden commissions were automatically unlawful. However, it opened the door for an industry-wide redress scheme by the FCA. The FCA has faced criticism for shielding its analysis from proper scrutiny, with VWFS' lawyers alleging that the regulator is shielding its analysis from proper scrutiny.
Written by urgent.news from City AM's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
