What is a Discretionary Commission Arrangement (DCA)?

What it is

A Discretionary Commission Arrangement (DCA) was a contractual deal between a UK motor finance lender and the dealer or broker who arranged your loan. The lender set a base interest rate. Under a DCA, the dealer was allowed to raise that rate above the base before presenting it to you. The higher the rate, the bigger the commission the lender paid the dealer. The customer signed the agreement at the higher rate, and none of this was disclosed on the paperwork.

The conflict of interest is the point. The person selling the car had a direct financial reason to charge a higher APR, and the driver had no way to see it. DCAs were used across the FCA-regulated motor finance market from 2007 until the Financial Conduct Authority (FCA) banned them outright on 28 January 2021. DCA is the headline category within the broader term “hidden commission”, which also covers high-commission flat-fee arrangements and certain tied dealer–lender relationships that the FCA’s 2026 scheme treats alongside DCAs.

Why it matters for your claim

DCAs are the largest single category within the FCA’s 2026 motor finance redress scheme. The FCA’s final scheme rules cover approximately 12.1 million agreements across DCAs, high-commission arrangements, and certain tied agreements, with an estimated total of around £7.5 billion in redress at projected uptake. You may be eligible if all four apply: you took out PCP or HP between 2007 and 28 January 2021; it was arranged through a dealer or broker, not direct from the bank; you were not told about the commission arrangement; and the agreement sits within the affected lender population. The FCA’s published average redress estimate is approximately £830 per eligible agreement — that is the FCA’s figure, not a Total Claim figure, and individual outcomes vary.