Volkswagen sets aside £725m for UK car finance mis-selling scandal, swinging its finance arm to a £353m loss

From the Newshound archive · first published 7 October 2026 · last updated 8 October 2026.

Volkswagen Financial Services UK has revealed a £725m provision to cover compensation costs for British customers overcharged on car loans, the first time the figure has been disclosed in public accounts filed at Companies House. Revenue actually rose to £3.41bn, meaning without the provision, profitability would have increased. Volkswagen has joined Mercedes-Benz and CA Auto Finance in legally challenging the FCA's redress scheme.

The FCA's industry-wide car finance compensation plan was estimated to cost lenders £7.5bn in total before being partially suspended in July after legal challenges.

Volkswagen Financial Services argues the FCA scheme 'does not reflect the specific elements' of how redress applies to a captive lender — one whose finance arm is tied to a parent manufacturer.