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News & Features

NAO Releases Report on the Motability Scheme

Posted in General News on Friday, December 7th, 2018

On 7th December 2018 the National Audit Office (NAO) released its report following its examination of the Motability Scheme. The NAO opened its report by praising Motability on the service it provides to the 614,000 people on the scheme. However it was noted that the scheme is supported by government and operates under very little risk which makes its high performance easier. It should also be said that only 36% of those who are eligible for the scheme are taking advantage of it and the NAO believes that Motability is investing very little time in trying to determine the reasons behind this.

As part of its financial examination the NAO found that Motability Operations has made £1.05 billion in unplanned profit since 2008 and a large proportion of this was put down to Motability Operations’ independent forecasts of the future value of their cars being as the report states, “out of line with the wider market average”. This has resulted in customers being overcharged in their lease agreements by a collective amount of £390 million over the past 10 years. Despite this Motability lease costs remain 44% lower than other market alternatives. The regulator was also very concerned about the large amount of monetary reserves held by Motability Operations and the sizable salaries of its executives. The regulatory body believes that both of these are far too high in relation to the risk that the company faces and it believes that if this money was invested correctly Motability Scheme customers would benefit significantly. On 31st March 2018 for example, Motability Operations held £2.62 billion in reserves and when taking into consideration the amount of funds available to the scheme, the NAO found this to be significantly higher than other car leasing companies. With this in mind, the regulator recommended that both Motability the Charity and Motability Operations work together to develop a long term plan to establish how the profits of Motability Operations will either be invested back into the scheme or donated to the charity for the benefit of disabled people. The NAO is keen for the resulting strategy to be informed by a broad consultation and Motability responded to the recommendation by pointing out that there is already a framework in place to decide how the charity spends the sizable donation it receives from Motability Operations to benefit disabled people. Motability has agreed to expand its consultation to include a wide range of external stakeholders in 2019 and continue to develop the strategy. To aid this process the NAO recommended that Motability Operations should have its cash reserves externally evaluated in relation to comparable companies in similar industries and Motability has assured the NAO that this is being implemented.

On the subject of executive pay, the NAO mentioned, among other things, that a Long Term Incentive Plan (LTIP) was set up in 2008 enabling five executive directors to receive 15.3 million over seven years for achieving performance targets set below the levels that were already being reached when they were introduced. Therefore the NAO recommended that Motability conducts a review of the performance framework of the scheme, taking into consideration its “uniquely advantaged position”. Motability has agreed to carry out a review in the context of its guiding principles which centre around maintaining high levels of customer satisfaction and ensuring the financial stability of the scheme. As part of its governance review Motability has stated that The Scheme Agreement will be updated in an effort to improve the procedures which influence executive pay.  The NAO is looking for Motability to report openly on the findings of their governance report as well as all the changes that occur as a result of it.

On a positive note the regulator mentioned that Motability invested £345 million to support Motability’s grant activity between 2010 and 2017 and Motability Operations made a donation of £400 million to the Motability Charity in September 2018. The charity is also expected to receive on going donations of at least £100 million per year. However, the NAO has found that there is no long term plan in place detailing how this money can be put to best use. Amyas Morse, head of the NAO commented: “The Motability scheme delivers an excellent service to its customers, earning remarkable satisfaction levels. Motability Operations’ management deserves credit for having turned the business around and investing in features that have enhanced benefits for customers. However, Motability Operations has taken an unnecessarily conservative view of risk, holds more in reserves than arguably it needs and has also made large unplanned profits. On top of which there has been an internal view of executive performance as being ‘consistently extraordinary’, with the reward to match, despite pressures from the Charity. There is much to be proud of, but we think that stakeholders, including government, need to give far-reaching consideration to the scheme as it now stands, and to its future, in particular, whether its governance and accountability arrangements are robust enough.” DMUK CEO, Graham Footer commented: “Many of our charity’s members are on the Motability Scheme and have been for a number of years. While the scheme provides an essential lifeline to these individuals, we believe that Motability could make better use of its surpluses to not only improve the scheme for its customers but alleviate many of the problems they face on a daily basis as disabled motorists. We look forward to working with Motability in the future to fully implement the recommendations of the National Audit Office.” 

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robert latimer's Gravatar
robert latimer

Friday, December, 14th, 2018

the scheme is very very good it takes all the worry out of motoring, servicing & mot are all taken care of i am, now on my fourth car 2 of which I had for 5yrs i am very pleased with them.

John Vickers's Gravatar
John Vickers

Friday, December, 14th, 2018

Talk about snouts in the trough! I have just ordered my 6th vehicle on the scheme. Each time I have to budget between £2000-£3000 deposit because of the type of vehicle and adaptions that i require for my disability. Ex- Motability vehicles have a higher than average resale value because of low mileage, maintenance and condition. Motability should immediately go back over the past few years and recompense scheme members when the resale value they achieve for the vehicle is higher than was budgeted for at the end of the contract. They also do not appear to be supporting the "Green Policy" as true Plug-in or EV vehicles are extremely limited on the Scheme. I see in the Press that the CEO has had to resign over the totally inflated salaries he and his Senior Staff have enjoyed over the past few years.

Patrick Dulson's Gravatar
Patrick Dulson

Friday, December, 14th, 2018

Before I became a wheelchair user I was a company director and leased many vehicles for my staff and myself. When I joined the Motability scheme I found that the advance payments are much higher that I was previously used to and given that the vehicles are returned with lower than industry standard mileage, I feel the overall costs are relatively higher than they could be. However the other costs of running a vehicle such as insurance and maintenance are included which does bring the overall costs down to below average business leasing costs. I would hope to see some investment by Motability into reducing the overall lease costs of WAV's and other specialised vehicles.

Mahesh Patel 's Gravatar
Mahesh Patel

Friday, December, 14th, 2018

Why can't you make automatic cars the same price as manual cars and give more high end vehicles with the added extra's built in to make life easier for disabled motorist instead having to pay for the added extra's which we can ill afford. With all thatextra cash you have atleast you give us a bit more choice instead of the same old rubbish.

SIDNEY STRATTON's Gravatar
SIDNEY STRATTON

Friday, December, 14th, 2018

SIR/MADAM, l am a MOTOBILITY customer since the 1997 and still am, in reading the NAO report does that mean we will be getting a rebate or a reduction in payments, because l have notice that the monies lve been paying have gone up considerably, so if we are getting a rebate it would be most grateful and thankful. An early answer would be appreciated and thank you......

 Derek Brown's Gravatar
Derek Brown

Saturday, December, 15th, 2018

With such high levels of profit would it not be possible for the scheme to be extended to people on Attendance Allowance? We could give up part or all of our AA to cover the cost of the lease. While I realise that not everybody could give up their AA. I'm sure not everybody on DLA/PIP can afford to give up the Mobility part of their allowance. And that part of the reason why only 36% of those eligible take up the scheme.

John Vickers's Gravatar
John Vickers

Saturday, December, 15th, 2018

Talk about snouts in the trough! I have just ordered my 6th vehicle under the scheme. Each time i have had to pay a deposit of between £2000-£3000 because of the type of vehicle and adaptions that I need for my disability. Where the final residual value of a vehicle at the end of the lease exceeds that budgeted for at the start, the balance should be reimbursed to the member. Motability vehicles are in demand by dealers because of their low mileage, regular maintenance and good condition. I see in the press that the CEO of Motability Operations has resigned because of the excessive salaries paid to senior staff.

Pauline Silk's Gravatar
Pauline Silk

Wednesday, January, 2nd, 2019

I agree that the scheme is very good as far as taking the worry out of motoring goes but the up front payments are getting unaffordable. I need a car with a large boot to take my mobility scooter (and hoist) and these require upfront payments of £2-3,000. If I get a smaller car and leave the scooter behind, I cannot get around when I reach my destination! With these profits, surely they could reduce these payments to a more affordable level. I am now reaching the point where I am doubting if I will be able to afford to renew at the end of this lease.

Kelvin Gledhill's Gravatar
Kelvin Gledhill

Wednesday, January, 2nd, 2019

I would like to see Motorbility bring back the purchase finance that they used to provide allowing us to purchase our vehicle at the end of the lease. This allowed us to the opportunity to own the vehicle we have looked after when otherwise we wouldn`t be able to buy as because of our circumstances we would have to lease another one when perhaps we are more than happy to keep the vehicle instead of giving the profit to car dealers who would make big profits on the sale.

Marlene's Gravatar
Marlene

Monday, January, 14th, 2019

I've been a motobility member for a few years and I find this overcharging customers very wrong Surely if we have been overcharged we should have a refund of the overpayment as it is our money and I feel very upset about the fact no one is being responsible to return what belongs to us

Donald's Gravatar
Donald

Wednesday, January, 2nd, 2019

It is utterly deplorable that the profit from this system is notably not giving as much benefit to It's members as would seem fit. The deposits on cars seem to rise considerably every time a new contract is due.

Steve Paget MBE's Gravatar
Steve Paget MBE

Wednesday, January, 2nd, 2019

Whilst it is a very good scheme, the profits being made and, the salaries of some are excessive. As a charity, Motability Trustees are surely legally responsible and liable for ensuring funds are used to the benefit of beneficiaries under charitable law? Motability Operations should surely be made to either reinvest a very large amount of these cash reserves back to Motability to help fund further grants/benefits to users of the scheme or, refund those who it seems have been overcharged for many years.

John Davies's Gravatar
John Davies

Wednesday, January, 2nd, 2019

I donate monthly as I thought Motability being a charity needed support. Now reading this report seeing the immoral payments made to executives and profits I have changed my mind. Every five years I struggle to find a replacement for my current car as in the current vehicle the down payment has increased by over 300% requiring a payment of nearly £4000 compared with three years ago £1500. I smell a rat here and have started thinking something is a miss. Not impressed with the report as it shows Motability in a bad light and I will be stopping my monthly gift.

Michael Baker's Gravatar
Michael Baker

Wednesday, January, 2nd, 2019

In my view the guy at the top gets a disgusting amount of wages and a even bigger disgusting amount of bonus every year, I believe in fair pay to fair people but this man is laughing at everyone on the motability scheme he's making a mockery of motability charity by the disgusting amount of money he's being payed, if motability where a public company they would be paying higher taxes and this would benefit the government but being a charity they can get a way with alot more. To be totally honest I think after what has happened with charity's over the last few years they need to put proper people in charge yes they will need to know how to make money for the charity but be payed a lot and I mean alot less money so they can give more back to there disabled clients and not tackso much out of our money because the end of the day it is us disabled motability clients that are paying for this disgusting amount of money being payed to the people at the top of motability on both sides of the charity. The advansted payments I always thought was set by the car dealer but it's not this is also set by motability and there are also cutting the type of cars we can have witch means they can charge what ever they wish in advance payment in the future.

Red Ron's Gravatar
Red Ron

Wednesday, January, 2nd, 2019

OMG! i can't believe one of the comments on here! asking for more high end vehicles and with extras on the scheme?!!! what the actual!! Motability is a scheme to give independence! NOT to make you look flashy while your out and about and give you a status! high end makes should NOT be part of the scheme PERIOD! What would actually be nice would be if the only makes of cars available on the scheme were British made! that way the money stays within the country! and supports our own economy! When taxpayers can't afford to go out and buy a mercedes or Audi why the hell should anyone on Motability be above those who are funding the scheme! That right there! pure greed and entitlement! Shame on you!

Bill McIntosh's Gravatar
Bill McIntosh

Wednesday, January, 2nd, 2019

"This has resulted in customers being overcharged in their lease agreements by a collective amount of £390 million over the past 10 years." The findings by the National Audit Office is very disturbing as this can lead to many motorists who are in a lease agreement or have been involved with Motability Scheme customers. I can see this as a way forward for many motorists demand that their payments be looked at over the 10 year period and all excess monies can be given back to each motorist who falls into this bracket. Hopefully Motability Operations can implement this before a culture of 'No Win No Fee' is forthcoming notwithstanding any new policies that will be in place in the very near future. Even if Motability Operations amend their pricing structure for the future of Motability drivers I think many Motability customers will be looking at their monthly payments more closely before changing there vehicle after their 3 year lease is up. Lowering any upfront deposits can be very welcoming. For now with £390 million that has been stated as an over payment for 10 years many many motability motorists will be asking one question ... will this over payment be refunded back to motorists.?

C CROTTY's Gravatar
C CROTTY

Wednesday, January, 2nd, 2019

As someone who drives an automatic one improvement would be making the dealers have an automatic available to test drive I have had 6 scheme cars none of which I have been able to test drive even with giving prior notice of attending the car show room Plus I agree that having an automatic means that I have less choice and have to pay more I have had some times when looking for a new scheme car with limited deposit I have ended up with a choice of 2 or three cars which are suitable both these issues could be eased with more thought and a bit of money Maybe starting with paying a bit less to the people at the top lets face it this Motability has the monopoly on leasing to us they are not going to be out bid or find they have no customers so we should reap some of the rewards as loyal customers

Robert Nicholls's Gravatar
Robert Nicholls

Wednesday, January, 2nd, 2019

If the scheme users, myself bring one gabe been overcharged in the past 10 years should they be devising a plan to reimburse the overcharge and interest on that sum? The scheme is also lbeing more limited on suitable vehicles for disabled drivers to access. In my case I need to have a vehicle that is high off the ground and maximum headroom as well as being an automatic. The choices since July have been cut drastically, 80% of the vehicles I could access have been removed from the scheme and not replaced. The other thing that Motability seems unaware of or when reported doesn’t take any notice if is the vehicle that is usually available to test drive isn’t the vehicle that is available on the scheme. It’s usually the vehicle that is above the model you can have. Surely you should be able to rest the version that you an have on the scheme?

Barry Miller's Gravatar
Barry Miller

Wednesday, January, 2nd, 2019

I agree that the scheme is in many ways very good and has some merit, however, It would be nice if some of this excess profit is used to reduce the initial payment of vehicles. WAVS have especially high initial down payments.

Sam's Gravatar
Sam

Wednesday, January, 2nd, 2019

My twopenneth... I read the full report from the audit office, the recommendations are achievable for motability without making any real impactful changes at either the organisational, practical, moral or ethical level... I personally would have gone VERY much further, and don't think it would be an exaggeration to say its borderline criminality. As to why people don't take it up... I can only speak for myself... I'm not the audit office, but I knew it was dodgy as soon as they are setting their rates at what they can get and dodging tax. My condition carries a large degree of uncertainty about the future, if I get better, lose the higher rate, have to give my car back, that means I'm without a car at the same time as I have max financial and work uncertainty and might not be able to replace it... No thanks, I'll just sort myself out... As a matter of principle I'd very much rather any profit from my motoring went to the helpful, reliable, conscientious man at the local garage, who contributes to the local economy and lives openly and honestly in our small community, than that greedy set of crooks who, it seems, remain largely unaccountable despite audit. Such a shame though, was a great idea.

Sara Evans 's Gravatar
Sara Evans

Wednesday, January, 2nd, 2019

I elect to spend my motoring dollars with the man at the local car garage... I know him, he's honest and helpful, and lives and works in our small and highly accountable community. Speaking for myself I chose not to get a mobility car for 2 reasons, firstly I kinda thought they might be crooked as they charge what they can get and don't pay tax, secondly my condition is uncertain - I might not be eligible in 2 years time then I have to give my car back - next news i'm without a car, in a rural community, at a time when my finances would be very uncertain... No sir, seen that coming, I'll just sort myself out thank you very much. I got a lovely second hand automatic, couple of adaptations, and had enough change to get a scooter for the boot too. I was interested to see how many other people don't take it up though, made me wonder what percentage of those are drivers? Happy new year to you all.