Report this to Citizens Advice, ask them to pass the matter to Trading Standards for enforcement action. Mis-selling credit based services is a serious offence, doing so to a vulnerable customer is doubly so. Make this report regardless of forum staff sorting this out, as it's the only way that the company will be properly held to account.
In terms of the forum staff sorting this out, be clear that (1) the mis-sold contract is to be cancelled, (2) that any payments taken are to be refunded, (3) that the treatment of a defaulted payment is to be cancelled, and (4) VM are to award significant compensation to your mother. There are multiple elements here: Mis-selling due to lack of need, aggravated by customer vulnerability, Failure to put right over several months despite repeated contact, Proceeding to enforcement action when in dispute As per this guide, I'd judge that those three elements are each a Tier 4 award (ie three very serious matters of complaint), and with very serious aggravating circumstances - so you're looking for something well above £500 by way of settlement.
Any messing around, of VM offering compensation short of my suggested sum, let us know and we'll explain how to escalate the matter for an independent review by the industry complaints adjudicator. VM lose the vast majority of adjudicated complaints, and they have to pay the adjudicators fees of several hundred quid in addition to the compensation they will be ordered to pay.
