What Is a Discretionary Commission Arrangement (DCA)?
A discretionary commission arrangement was a system used by car finance lenders that gave dealers the power to set — and crucially, increase — the interest rate on a customer's finance agreement. The higher the rate the dealer set, the more commission they received from the lender.
This created a direct financial incentive for dealers to charge customers as much as possible, rather than offering the best available rate. In most cases, customers were never told this was happening.
The FCA banned discretionary commission arrangements in January 2021 after concluding they caused widespread harm to consumers across the UK car finance market.
Signs You May Have Been Mis-Sold Car Finance
The following are common indicators that your car finance agreement may have included an undisclosed discretionary commission arrangement:
- You bought a car on finance through a dealership between January 2007 and January 2021
- The finance was arranged by the dealer rather than sourced independently by you
- You were not told the dealer received commission from the finance company
- Your interest rate was not clearly explained or compared against other available options
- You felt pressured to take the dealer's finance offer rather than shop around
- The finance agreement was PCP, hire purchase, or a conditional sale — the most common products affected
- You were not given the opportunity to negotiate your interest rate
If any of the above apply, your agreement may qualify for a claim under the FCA's compensation scheme.
Which Types of Agreement Are Covered?
The FCA investigation primarily covers the following types of car finance agreement:
- Personal Contract Purchase (PCP) — the most common form of car finance in the UK during the DCA period
- Hire Purchase (HP) — a straightforward finance agreement where you own the car outright at the end
- Conditional Sale — similar to hire purchase, where ownership transfers once all payments are made
Leasing agreements (personal contract hire) are generally not covered as they do not involve a credit agreement in the same way.
Which Lenders Are Involved?
The FCA investigation covers agreements issued by a wide range of UK car finance lenders. Major lenders commonly associated with DCA claims include:
- Black Horse Finance (Lloyds Banking Group)
- Santander Consumer Finance
- Close Brothers Motor Finance
- MotoNovo Finance
- Barclays Partner Finance
- PSA Finance UK
- Volkswagen Financial Services
- BMW Financial Services
- Ford Credit
- Moneybarn
- Hitachi Capital (now Novuna)
- Alphera Financial Services
If your finance was arranged through a dealership during the DCA period, it is worth checking which lender was involved regardless of whether they appear on this list.
How to Check Your Agreement
There are several ways to find out whether your car finance agreement included a discretionary commission arrangement:
- Request your credit agreement: Contact your lender directly and ask for a copy of your original finance agreement. Lenders are legally required to provide this under the Consumer Credit Act 1974.
- Check your credit file: Use a service like Experian, Equifax, or TransUnion to view historical credit agreements, including the lender name and loan amount.
- Review old paperwork: If you kept your finance agreement, look for mention of "discretionary commission," "variable commission," or similar language.
- Use our free claim check tool: Our car finance claim check tool can help you assess your eligibility based on your lender, agreement type, and purchase date.
What to Do Next
If you believe your car finance agreement may have been mis-sold, the next step is to submit your details for a free eligibility assessment. An FCA-authorised claims specialist will review your agreement and advise whether you have a valid claim.
Most claims are handled on a no-win, no-fee basis, meaning there is no cost to you unless your claim is successful. Use our car finance claim calculator to estimate the value of your potential claim, or complete the free claim check form below to get started.
Frequently Asked Questions
How far back can I claim for mis-sold car finance?
The FCA investigation covers agreements signed between January 2007 and January 2021. If your finance agreement falls within this period and included an undisclosed discretionary commission arrangement, you may be eligible to claim.
Can I claim if I no longer have the car?
Yes. Whether you have sold the car, handed it back, or the agreement has ended, you may still be eligible to claim. Eligibility is based on the agreement itself, not whether you still own the vehicle.
Do I need a solicitor to check if I was mis-sold car finance?
No. You can check your eligibility yourself using our free claim check tool. If you decide to proceed with a claim, an FCA-authorised claims specialist will handle the process on your behalf, typically on a no-win, no-fee basis.
How long does a mis-sold car finance claim take?
Timelines vary depending on the lender and complexity of the case. The FCA's compensation scheme is expected to result in payments beginning in 2026, though individual claim timelines may differ.
Is there a deadline to make a claim?
The FCA has set deadlines for lenders to handle complaints. It is advisable to submit your claim as soon as possible to ensure you are included in the compensation scheme.