The German car giant Volkswagen is preparing to disclose a massive hit from the City watchdog’s £9bn motor finance redress scheme, months after it joined a group of rivals in mounting a legal challenge to its implementation.
Sky News has learnt that VW Financial Services has filed accounts at Companies House which are expected to show that it has set aside hundreds of millions of pounds to compensate motorists who were mis-sold products over a period lasting years.
The accounts, which are expected to become public later this week, will provide the first indication of the size of the financial hit that VW – owner of Audi, Seat and Skoda – faces from the scandal.
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Analysts said on Tuesday that based on the provisions made by rivals including BMW and Mercedes-Benz, VW would have had to set aside at least £500m for compensation claims for the 2025 financial year.
Previous estimates suggested that the German giant’s total bill could be in the region of £1.5bn.
If confirmed, that would place it among the biggest financial losers from the motor finance scandal.
In response to an enquiry from Sky News, a spokesperson for Volkswagen Financial Services (UK) said: “VWFS has taken a robust and responsible approach to provisioning.
“In line with due process, we are awaiting publication of our annual financial statement on Companies House, where the company’s financial position will be presented accurately and with the appropriate context.
“We do not comment on figures ahead of the publication of our annual report and financial statements.”
In a legal filing earlier this year, VW Financial Services said the FCA scheme would have “a significant financial impact on VW FS”.
“VWFS is the largest captive lender in the UK motor finance market,” it said.
The section disclosing the number of customers who were provided finance by it during the period covered by the scheme and the amount of finance handed to customers was redacted to withhold the relevant figures.
However, in its 2024 accounts the company said close to £6bn had been advanced by the company during the year, down from £6.3bn in 2023.
VW FS said it made an operating profit of £178.7m in 2024, a sharp fall on the 2023 figure of just over £310m.
Parts of the FCA redress scheme have been suspended pending the outcome of the appeals by a string of motor finance providers.
Court hearings are expected to take place in December or February.
Sky News revealed earlier this year the identities of those challenging the FCA scheme.
It came after the prospect of a widespread legal battle appeared to have receded after the Finance & Leasing Association (FLA), whose members lent £55bn last year to help consumers buy cars, performed an eleventh-hour U-turn and abandoned plans to challenge the regulator.
A string of major motor finance players, including Barclays, Lloyds Banking Group, Santander and Close Brothers, also decided against legal challenges despite having taken hundreds of millions of pounds in provisions for compensation.
A consumer group called Consumer Voice is also challenging the FCA on the basis that it would short-change affected motorists.
