What is a discretionary commission arrangement and can I claim?
A discretionary commission arrangement, or DCA, is one of the main reasons so many people overpaid on car finance. In plain terms, it let the dealer or broker who arranged your loan choose how high to set your interest rate, and the higher they set it, the more commission the lender paid them. You were rarely told this was happening. The FCA banned DCAs on 28 January 2021, and after the Supreme Court ruling in August 2025 a formal redress scheme now covers older deals. If you had one, you may be owed money back.
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A DCA gave your broker a financial incentive to push your rate up, which created a clear conflict of interest that was almost never disclosed. The FCA's Motor Finance Consumer Redress Scheme (PS26/3, March 2026) covers agreements taken out between 6 April 2007 and 1 November 2024, including those with discretionary commission arrangements and other undisclosed commission. The FCA estimates around 7.5 billion pounds in total redress, averaging roughly 830 pounds per qualifying agreement. Lenders must contact customers they think are owed money, but you can complain yourself. If you have not been contacted, the deadline to complain to your lender is 31 August 2027. If you disagree with the outcome, the Financial Ombudsman Service can review whether the scheme rules were applied properly, for free.
Step by step
- 1Check whether your finance falls in the window. DCAs applied to car finance arranged before the 28 January 2021 ban, so deals from 6 April 2007 up to that point are the prime candidates. PCP and hire purchase agreements are the usual types. If you are unsure whether you had a DCA, you can still complain and ask the lender to confirm.
- 2Write to the lender on your agreement and ask them to confirm whether a discretionary commission arrangement applied to your finance, and to assess your complaint under the FCA redress scheme. Include your name, your address at the time, the vehicle and the rough start date.
- 3Review what they tell you. If a DCA applied and the commission was not properly disclosed, they should calculate your redress, which reflects the extra you paid because of the inflated rate, plus interest on top.
- 4If you are not happy with their assessment, or they do not respond, refer the complaint to the Financial Ombudsman Service for free and ask them to check the scheme rules were followed.
What they'll say, and your comeback
“There was no discretionary commission on your agreement.”
Comeback, Ask them to confirm that in writing and to state what type of commission, if any, was paid and whether it was disclosed to you. If they confirm a DCA was not present but commission still went undisclosed, your complaint may still qualify under the scheme.
“The commission arrangement was perfectly legal at the time.”
Comeback, The issue is not whether it was legal then but whether it was disclosed clearly and fairly to you. The redress scheme exists precisely because so many of these arrangements were hidden. Ask for it to be assessed on that basis.
“You signed the agreement, so you accepted the rate.”
Comeback, You accepted a rate without being told the broker could inflate it to earn more from the lender. That hidden conflict of interest is the heart of the complaint, not the signature.
FAQ
How do I know if I actually had a DCA?
Most borrowers were never told, so you often cannot tell from your paperwork. The simplest route is to ask your lender directly to confirm whether a discretionary commission arrangement applied to your agreement. They hold the records and the scheme requires them to assess it.
DCAs were banned in 2021, so why can I still claim?
The 28 January 2021 ban stopped new DCAs, but it did not refund anyone for the deals already in place. The redress scheme is what addresses those older agreements, going back as far as 6 April 2007.
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A self-serve tool, not a law firm. General information, not legal advice.