The FCA Is Now Investigating Motability Over Disabled Drivers Losing Their Cars

A financial regulator has been asked to investigate Motability Operations and its insurer, Direct Line Motability, after a data protection specialist gathered evidence that disabled customers were losing their cars, their insurance and, in some cases, their independence, through a driver-monitoring scheme the company itself paused three months ago.

Phil Swindin, a long-term Motability customer who uses hand controls to drive, has submitted evidence to the Financial Conduct Authority (FCA) covering four cases in which disabled drivers were removed from the Motability scheme under its Drive Smart programme. Two have already gone to the Financial Ombudsman Service, a third complaint is being prepared, and Swindin says the pattern he has documented is “the tip of the iceberg.”

What Drive Smart Actually Does

Drive Smart uses a windscreen-mounted device and a mobile phone app, or a black box for customers who cannot use a smartphone, to track how a vehicle is driven: speed, braking, and how often and how far it travels. Motability made it compulsory in September 2025 for every customer under 30 and everyone new to the scheme.

The technology assigns a weekly score. A driver who logs a “red week” for harsh braking, speeding or other flagged behaviour gets a warning. A second red week in a row, or four red weeks in twelve months, triggers automatic removal from the scheme. Motability says the goal is to reward safer driving with vouchers worth up to £160 a year and to keep insurance costs down for a shared-risk pool that covers every customer on the same terms.

The Figures Motability Released Under Pressure

Motability Operations has confirmed that 323 drivers were removed from the scheme between September 2025 and February 2026 for “proven and persistent dangerous driving” under Drive Smart. By February, 17,146 customers were signed up to the programme, which means roughly one in 53 enrolled drivers lost their place on it within five months.

In most cases another named driver kept the lease running. But in 52 cases the customer had to hand the vehicle back altogether, often in cases where the disabled person was the driver who had been removed. Motability told campaigners that inaccurate readings affected about 0.005 per cent of recorded journeys, fewer than 200 out of roughly four million logged. Campaigners argue that even a small error rate translates into real people losing a car they rely on for hospital appointments, work and getting the children to school.

How the “Pause” Still Left Customers Exposed

Motability suspended new Drive Smart rollouts in May after mounting complaints, but Swindin’s evidence to the FCA shows enforcement carried on regardless. In three of the four cases he examined, the customer did not know they had been signed up to Drive Smart at all. Named drivers were quietly dropped from the insurance policy without being told, and Motability Operations then terminated the lease on the grounds that the vehicle had been driven without valid cover.

The fourth case concerns the accuracy of the telematics data itself. All four cases resulted in two or four year bans from the Motability scheme, a penalty that follows the customer even if they try to insure a replacement vehicle privately.

Swindin told the FCA he had seen “genuinely upset, worried, panicked people, vulnerable by definition, who did not know where to turn,” and that the consequences he documented included cancelled hospital appointments, customers left unable to leave their homes, and family members liquidating savings and pensions to buy a replacement car outside the scheme.

Two Companies, Two Sets of Answers

Motability Operations runs the scheme and makes the removal decisions. Direct Line Motability, part of Aviva, provides the insurance behind it. Asked who was accountable when Drive Smart data proved wrong, Direct Line said the telematics data “is collected and owned by Motability Operations and all decisions based on this data sit with Motability Operations,” and that it had “no role in making decisions based on the telematics data.”

Motability Operations, in turn, said Drive Smart was introduced for customer groups with higher claims rates “to encourage safer driving and help manage rising insurance costs,” and accepted that “we did not introduce the programme in the right way.” Both companies are regulated by the FCA. The regulator has confirmed it uses evidence like Swindin’s in its supervisory work, though it will not say what action, if any, it plans to take.

Drive Smart Arrived Alongside Tax Changes That Squeezed the Same Customers

The controversy has not developed in isolation. Chancellor Rachel Reeves used November’s budget to impose VAT at 20 per cent on Motability advance payments and remove the scheme’s 12 per cent insurance premium tax exemption, changes Motability Operations says would add £1,100 to the average lease if nothing else changed. To offset that, the company cut annual mileage allowances and raised excess mileage charges on new leases from July, even as it was still managing the fallout from Drive Smart.

Seventy disabled people’s organisations, coordinated by the charity Transport for All, wrote to the government in March warning that the combined changes would “create further barriers for disabled people.” The organisation told Disability News Service that while it welcomed the pause on Drive Smart, “we need the same lessons applied to the wider changes to the scheme, including on mileage allowances and excess charges, and the government needs to be part of that conversation.” Motability customer Charlie Proctor, from Lancashire, is separately pursuing a judicial review against the Treasury over the tax changes, arguing the case raises “far wider issues involving proportionality, disability discrimination, mobility access, and the foreseeable impact of these measures upon disabled motorists.”

A Scheme Built on Trust, Now Under Scrutiny

The Motability scheme lets disabled people lease a car, scooter or powered wheelchair using the mobility component of their Personal Independence Payment or another qualifying disability benefit, and it depends on customers trusting that the company administering it, and the insurer behind it, will treat them fairly when something goes wrong. Drive Smart was meant to reduce claims costs across that shared insurance pool by rewarding safe driving. Instead, the four cases Phil Swindin brought to the FCA describe customers who lost that trust entirely: banned from the scheme for driving “without insurance” on a policy Motability Operations itself had altered without telling them.

Motability Operations insists it wants Drive Smart to be “clear, easy-to-use and support the independence of the disabled people who rely on the scheme,” and says a new customer experience panel will help shape any relaunch. But with an FCA submission now on record, two Financial Ombudsman Service complaints under way, and a third in preparation, the company’s account of a smoothly paused programme sits uneasily next to campaigners’ evidence of continued harm.

What You Can Do

Motability customers who believe Drive Smart has treated them unfairly have a formal complaints route, even while the scheme remains paused for review.

• Complain to Motability Operations in writing first, and ask specifically whether your case involved a “silent” driver removal, an insurance cancellation you were not told about, or disputed telematics data.
• If the response does not resolve things, or you get no response within eight weeks, take the complaint to the Financial Ombudsman Service. The Ombudsman can order compensation and require Motability or Direct Line to put things right.
• Report the same concerns to the FCA directly using its consumer contact form, referencing the Drive Smart programme; the regulator has said it factors public evidence into its supervisory decisions.
• Keep every message, journey log and app notification. Swindin’s casework shows the strongest complaints are the ones with a clear paper trail of what the customer was told and when.
• Contact Disabled Driver Voice, the advocacy group Swindin set up for Motability customers affected by Drive Smart, for free guidance on building a complaint.

Anyone currently enrolled in Drive Smart can also ask Motability directly whether they are required to remain on the programme, given it has been paused for new customers and under-30s renewing their leases. Customers who signed up before the pause are not automatically removed from it, and need to actively ask to withdraw.

Sources:

• https://www.disabilitynewsservice.com/regulator-is-asked-to-probe-conduct-of-motability-operations-and-its-insurer-over-drive-smart-distress/
• https://www.disabilitynewsservice.com/motability-pauses-drive-smart-scheme-but-customers-raise-concerns-as-wider-changes-remain-in-place/
• https://www.disabilitynewsservice.com/more-than-50-disabled-people-lose-access-to-motability-vehicle-in-first-five-months-of-drive-smart-scheme/