VWFS reveals £725m car finance misselling provision

Volkswagen Financial Services UK (VWFS) has set aside £725 million to cover potential customer claims and redress payments related to car finance mis-selling cases, the largest provision yet announced by a captive. 

The move follows last month’s announcement from BMW Financial Services that it had now increased the amount set aside to £612 million for claims under the FCA’s industry-wide scheme, plus an additional £25.5 million for claims that fall outside its scope. 

In its filing at Companies House VWFS warned the final bill could “vary materially” from current estimates, while BMW FS also cited “material uncertainty” as to the eventual outcome. 

VWFS recorded a £486 million pre-tax loss for the year ended December 31 225, compared with a £136 million pre-tax profit the previous year.  

The company is one of three captives along with Mercedes Benz Financial Services and CA Auto Finance, and the pressure group Consumer Voice, to have mounted a legal challenge to the FCA proposals at the Upper Tribunal. 

As a result, the FCA redress scheme, due to have commenced this summer, is currently stalled and could be overturned, depending on the Tribunal’s findings. 

VWFS said in a statement that it continues to seek independent clarification from the tribunal to ensure the scheme is “lawful, fair and properly targeted.”

The Tribunal has said it will hear the case in either December 2026 or February 2027.