Fleet News

Disabled driving organisation is split in two parts

MOTABILITY was established in 1977 to provide disabled people with cars using their DSS disability allowances to meet all or part of monthly contract hire charges.

Motability - the charity - oversees the scheme and determines who qualifies for a vehicle. Finance, however, is provided by Motability Finance Limited - a private company owned by Barclays, NatWest, Midland, Lloyds, the Bank of Scotland and the Royal Bank of Scotland.

As well as providing funds, MFL also negotiates with dealers, manufacturers and insurers to secure discounts on cars and services. The scheme currently finances 246,000 cars and wheelchairs and last year, MFL bought 98,906 vehicles for the scheme - affording it unrivalled purchasing power as the largest fleet buyer in Europe.

In recent years, pressure has mounted on the banks owning MFL to disclose the profits they make from the scheme which until now, have never been revealed. The report clarified the position on profits, margins and excesses accrued by the banks who owned the organisations within MFL. Since halving their profit margin from 2% in 1993, the banks earned £15.6 million before tax on their total funding of £1.2 billion in the 12 months from September 1994 to September 1995.

The so-called 'contingency margin' - to protect against risks involved in running the scheme, which in 1994 stood at 1% - was halved last year and removed altogether in April this year following criticisms that the risks involved in collecting money from the DSS to pay for the vehicles were low compared with those incurred in business in general.

Since 1988 the sums accumulated have exceeded the levels considered necessary to safeguard the scheme and in view of this £35 million was transferred from MFL to the Motability Tenth Anniversary Trust - a charitable trust which makes grants to disabled people and research institutions. Last September, a further £26.9 million of the contingency reserve was also considered excess to safeguard requirements and is now being used to lower prices for all customers by around £80 over a typical three-year contract.

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