AA Driving Schools Hit with £4.2m Fine and Must Refund Thousands of Learners
The Competition and Markets Authority (CMA) has taken decisive action against two of the country's largest driving schools for misleading pricing practices. AA Driving School and BSM Driving School, both owned by the AA, have been ordered to refund more than 80,000 learner drivers and pay a substantial financial penalty.
Mandatory Fees Hidden During Online Booking Process
The CMA investigation revealed that between April and December 2025, learners booking lessons through the AA and BSM websites were not shown the complete price upfront as required by law. Instead, a mandatory booking fee was added later in the checkout process, a practice known as 'drip pricing' that violates consumer protection regulations.
For new customers, the full price only appeared at the final checkout stage after lessons had been selected, times chosen, and personal details entered. Returning customers saw the booking fee displayed separately from the initial price, with the total only calculated on the following page.
Substantial Financial Consequences for AA
The financial impact on the AA is significant. The company must refund affected customers over £760,000 and pay a fine of £4.2 million for breaking consumer law, bringing the total cost to nearly £5 million. This represents the first financial penalty the CMA has imposed using its new enforcement powers that came into effect in April 2025.
Individual refund amounts will vary depending on how many lesson packages each customer purchased, with the average payout expected to be around £9. Affected customers do not need to take any action - the driving schools will contact them directly to arrange automatic refunds to their original payment cards, or send cheques where card refunds are not possible.
CMA's Strong Warning to Businesses
Sarah Cardell, Chief Executive of the CMA, issued a stern warning: "If a fee is mandatory, the law is clear: it must be included in the price from the very start - not added at checkout - so consumers always know what they need to pay. At a time when people are watching every pound, dripped fees can tip the balance."
"With our new powers, it will never pay to break the law or treat consumers unfairly. Where the rules are ignored, we'll step in to put things right," she added, emphasising the importance of transparency in essential services like learning to drive.
Broader Crackdown on Drip Pricing Practices
This case forms part of a wider CMA initiative against deceptive online pricing tactics. In November 2025, the regulator launched a major consumer protection drive focusing on such practices, investigating eight businesses including the AA driving schools.
The problem of hidden fees is widespread according to government research. A 2023 Department for Business and Trade study found that nearly half of online businesses (46%) use hidden or dripped fees, costing consumers an estimated £3.5 billion extra annually. Service fees like booking or processing charges were particularly problematic as they're typically mandatory and revealed late in the purchasing process.
Early Settlement Reduces Penalty
The AA received some mitigation for its cooperation. By admitting to breaking the law and agreeing to settle the case early with the CMA, the company secured a 40% reduction to its financial penalty. The AA stated it moved quickly to address the CMA's concerns once they were raised.
This settlement marks a significant milestone in the CMA's enforcement work since gaining strengthened consumer powers last year. The regulator has launched investigations into 14 businesses for various unlawful online practices, including recent probes into Autotrader, Feefo, Dignity, Just Eat, and Pasta Evangelists regarding fake and misleading reviews.
The CMA has also initiated a Clear Pricing campaign, providing businesses with practical guidance and a three-step checklist to ensure their prices are transparent and compliant with consumer protection laws.
