Motability Operations’ £370 million reserves redistribution set to benefit Motability customers
Following the revelation that Motability Operations has £2.5billion of reserves and was paying its senior executives’ abundant remuneration packages, the organisation has vowed to reform its financial management and redistribute substantial funds to help customers.
The revelation of £2.5billion in reserves
Contracted by charity Motability to operate the lease scheme which provides disabled drivers with access to a vehicle or mobility device in return for direct access to their £58-a-week mobility benefits, Motability Operations came under scrutiny in 2018 when it was accused of holding excessively large reserves.
At the request of the Treasury and Work & Pensions Committees, the National Audit Office (NAO) conducted a review last year into the Motability Scheme, revealing the extent of the reserves and pay packages in place for its CEO Mike Betts and other senior management.
With the level of reserves being branded “intentionally conservative” in the NAO report, the two committees said Motability Operations’ reserves were “out of proportion to the risks it faces.”
In light of the NAO’s findings, the Treasury and Work and Pensions Committees in February 2019 called on Motability to fully implement the National Audit Office’s (NAO) recommendations for reforms to the scheme’s financial management.
Motability Operations’ commits
After an external review of its reserves policies carried out by Oliver Wyman, Motability Operations announced on the 14th June that the Board resolved to release capital reserves to a level of £370m below the September 2018 balance sheet position.
Importantly, the organisation stated it plans to commit £100m of this release of reserves to support customers, whilst the balance of the remainder, along with all this year’s profits, will be donated to Motability to provide wider support for disabled people and their families.
A welcome announcement
Commenting on this announcement, Rt Hon. Nicky Morgan MP, Chair of the Treasury Committee, said: “As our Committees have concluded recently, Motability Operations’ significant financial reserves are difficult to square with the honourable objectives of the scheme.
“Last week’s announcement by Motability Operations – that it will release £370 million from its reserves to support customers and disabled people with mobility needs – is good news for members of the scheme.
“Motability Operations must now ensure that its customers will benefit from this either in the form of lower prices or more generous vehicular adaptations.”
Rt Hon. Frank Field MP, Chair of the Work & Pensions Committee, said: “At long last and after months of chivvying by our committees and the NAO, Motability Operations has begun to accept that it can’t just sit there on piles of reserves built up thanks to the taxpayer’s unique support.
“That’s most welcome, but is only a first step. There is still a way to go before we are satisfied that Motability is even beginning to make the best use of its vast funds and privileged position, to provide the best possible service for disabled people.”
The redistribution of reserves comes following the appointment of the Rt Hon. Sir Stephen O’Brien as its new Chairman after former Chairman Neil Johnson retired at the end of March 2019. Agreeing to step down as CEO in December 2018, Motability Operation’s CEO Mike Betts is expected to step down from the Board no later than May 2020.https://thiis.co.uk/motability-operations-370-million-reserves-redistribution-set-to-benefit-motability-customers/https://i0.wp.com/thiis.co.uk/wp-content/uploads/2019/04/customer-motability.jpg?fit=1000%2C668&ssl=1https://i0.wp.com/thiis.co.uk/wp-content/uploads/2019/04/customer-motability.jpg?resize=150%2C150&ssl=1Government & LegislationNewsroomThird SectorFrank Field,Mike Betts,Motability,Motability Operations,Nicky Morgan,reserves,Treasury Committee,Work & Pensions CommitteeFollowing the revelation that Motability Operations has £2.5billion of reserves and was paying its senior executives' abundant remuneration packages, the organisation has vowed to reform its financial management and redistribute substantial funds to help customers. The revelation of £2.5billion in reserves Contracted by charity Motability to operate the lease scheme which...Calvin BarnettCalvin Barnettcalvin@thiis.co.ukAdministratorTHIIS Magazine