What Exactly Was a Discretionary Commission Arrangement?
When you bought a car on finance between April 2007 and January 2021, your dealer almost certainly earned a commission from the finance company for arranging your loan. That, in itself, is normal. The problem was how that commission was calculated.
Under a Discretionary Commission Arrangement — or DCA — the dealer had the power to choose the interest rate on your finance agreement, within a range set by the lender. The higher the interest rate the dealer set, the higher their commission. Your monthly payments went up, the dealer made more money, and you were none the wiser because this arrangement was never disclosed to you.
This created an obvious and serious conflict of interest. The dealer who was supposed to help you find the best deal was financially incentivised to do exactly the opposite.
A Simple Example: How a DCA Worked in Practice
Imagine you're buying a car worth £15,000. The finance company tells the dealer they can offer you a rate anywhere between 5% and 12% APR.
- If the dealer sets your rate at 5% APR, your total interest over 48 months is approximately £1,580. The dealer earns a small commission.
- If the dealer sets your rate at 12% APR, your total interest over 48 months is approximately £3,860. The dealer earns a significantly larger commission.
The difference to you: over £2,200 in additional interest — for the exact same car, the same lender, the exact same risk profile. You simply had no idea it was happening.
The Timeline: From DCAs to the Supreme Court
Which Lenders Were Involved in DCAs?
DCAs were not a practice limited to a handful of rogue lenders. The FCA's investigation found the arrangement was standard practice across the motor finance industry. Here are the major lenders involved:
Other lenders under review include Volkswagen Financial Services, Ford Credit, Alphera Financial Services, MotoNovo, and many more. See our full lender directory for details on all affected providers.
Why Were DCAs Not Disclosed to Customers?
This is the crux of the legal issue. Regulated firms in the UK have a duty to disclose any material conflicts of interest to their customers. A dealer who can inflate your interest rate to earn more money has an obvious conflict of interest. The failure to disclose this arrangement means that lenders and dealers breached their obligations under the Consumer Credit Act and FCA regulations.
The Supreme Court's ruling in Johnson v FirstRand confirmed that this non-disclosure was not merely a technical breach — it was a fundamental failure that gave rise to a right to seek redress.
DCAs vs. Other Car Finance Commission Structures
It is worth understanding what made DCAs different from the commission structures lenders still use today:
Discretionary Commission Arrangement (DCA) — Banned in 2021
The dealer sets the rate within a range. Their commission is linked to the rate set. The higher the rate, the more they earn. No disclosure to the customer required (at the time).
Flat Fee Commission — Currently Permitted
The dealer earns a fixed fee per deal, regardless of the interest rate. There is no incentive to inflate the rate. This is the model required post-January 2021.
Volume-Based Commission — Permitted with Disclosure
The dealer earns more if they refer more customers overall, but individual rates are not affected. Must be disclosed under current FCA rules.
How Much Could I Claim for a DCA?
The FCA estimates that the average consumer may be owed around £700 per affected agreement. However, this is an average — individual amounts vary considerably based on:
- The original finance amount (larger loans = larger potential overcharge)
- The interest rate difference between what you paid and the minimum available rate
- The length of your agreement (longer = more interest paid overall)
- Whether you had multiple agreements over the years
In some cases, particularly for higher-value vehicles and longer agreements, compensation can exceed £5,000 per agreement. Use our free eligibility checker to get a personalised estimate.
What Is the Difference Between a DCA Claim and a PCP Claim?
You will often hear the terms used interchangeably — "PCP claim," "DCA claim," "car finance mis-selling claim." Here is the precise distinction:
- PCP (Personal Contract Purchase) — a type of car finance agreement. DCA claims can involve PCP agreements.
- HP (Hire Purchase) — another type of car finance. DCA claims can also involve HP agreements.
- DCA claim — a claim based on the specific practice of undisclosed discretionary commission arrangements, which can apply to both PCP and HP agreements.
In practice, when people talk about PCP claims, they mean claims arising from DCAs in PCP agreements. But if you had an HP agreement, you may equally be entitled to claim.
Real Cases: What UK Motorists Received
The following examples illustrate the range of outcomes for MotorRedress clients across different lenders, vehicle types, and agreement years.
John Klerit, 44, Leeds — PCP 2018 • Black Horse • Ford Focus • £2,180 recovered
"I took out that Ford Focus on PCP back in 2018 and honestly forgot all about it once I'd handed the keys back. A mate mentioned MotorRedress — 60 seconds and they found it. Two months later £2,180 landed in my account."
Martha Singh, 36, Birmingham — PCP 2019 • Santander Consumer Finance • Nissan Qashqai • £1,470 recovered
"They found my Qashqai agreement without me needing a single piece of paperwork. Getting £1,470 back for our family is a real difference."
Yulia Volkov, 31, Manchester — PCP 2020 • MotoNovo Finance • VW Golf • £940 recovered
"I had no idea this kind of thing could happen. MotorRedress handled everything — I didn't have to deal with the lender directly at all."
Hagen Scholz, 48, London — PCP 2017 • Close Brothers Motor Finance • BMW 3 Series • £4,350 recovered
"I had three agreements in the affected period. MotorRedress found all of them. The amounts involved are not trivial."
Individual results vary. These figures represent actual amounts recovered by named clients. No specific outcome is guaranteed.
Next Steps: How to Make a DCA Claim
The process for making a DCA / PCP claim through MotorRedress is straightforward:
- Check your eligibility — Use our free 60-second checker to see if your agreement is likely to be covered.
- We gather your details — Our team, backed by specialist solicitors from Milberg London, contacts the relevant lenders on your behalf.
- Lender response — Under the FCA's redress scheme, lenders are required to review and respond to valid claims.
- Compensation paid — If your claim is successful, compensation is paid directly to you.
The entire process is No Win No Fee. You pay nothing upfront, and nothing at all if your claim is unsuccessful.