Hi Keith,
When an honest man gets shat on for being honest you know the system is flawed. Other than a jobsworth mentality there can be no reason as to why you couldn’t keep the incorrect car. To be honest, and assuming that Motability has expert level senior managers working in the organisation, it sounds like this issue hasn’t yet got the ear of somebody senior enough to be able to make a judgement call instead of quoting policy. I would question whether their decision isn’t in fact discriminatory. If your dealer has accepted responsibility and offered to take the financial hit one can assume that they would have done the same if you’d paid via merc finance or cash. So, the only reason you’re not sitting in your new car right now is because you’ve chosen to purchase through a scheme specifically designed to aid disabled people. That negatively differentiates you from other customers in a pretty severe way. If it were me I would be firing a letter off to the CEO asking for his explanation of why he considers this appropriate. It’ll probably never reach him but it might reach a manager senior enough to be able to make a sensible decision.
Good luck with getting a positive resolution and at least rest easy that your integrity can’t be questioned. If that were me I’d have been getting hairdryers and scrapers on that badge ASAP!