Discretionary Commission Arrangements (DCAs) allow car dealers to set their own interest rates on finance deals. This practice lets them earn higher commissions by increasing the cost for customers. The Financial Conduct Authority (FCA) banned DCAs in 2021, but millions of drivers had already overpaid.
How Much Have Borrowers Overpaid?
The FCA estimates that UK consumers were overcharged by an average of £1,100 per car finance agreement. In total, more than 560,000 customers may have been affected. These unfair commissions inflated monthly payments, making car finance unnecessarily expensive.
Why Were DCAs a Problem?
Car dealers and finance brokers had a financial incentive to increase interest rates. The higher the rate, the bigger their commission. Many customers were unaware that their finance deal included inflated charges due to dealer discretion. This led to excessive costs that were not justified by risk or creditworthiness.
Can You Get Your Money Back?
If you took out car finance before 2021, you might be entitled to compensation. The FCA is investigating past deals and encouraging affected customers to submit complaints. Several financial claims companies, including Oodle Claims, are helping drivers recover their overpaid interest and fees.
Steps to Claim Compensation
- Check your finance agreement – Look for Personal Contract Purchase (PCP) or Hire Purchase (HP) agreements.
- Identify excessive interest rates – If your rate was higher than advertised, you may have been overcharged.
- Submit a complaint – Contact your lender and request a refund based on unfair commission charges.
- Escalate to the Financial Ombudsman – If your claim is rejected, take it to the FCA’s ombudsman service.
What Happens Next?
The FCA is reviewing historical car finance agreements to determine the scale of overcharging. Lenders may be forced to refund billions to affected customers. A ruling is expected in 2025, which could trigger widespread compensation payments.
Final Thoughts
Discretionary Commission Arrangements allowed dealers to profit at the expense of consumers. If you took out car finance before the FCA ban, now is the time to check if you were overcharged. Filing a claim could help you recover hundreds or even thousands of pounds. Don’t ignore it—act now to reclaim what’s rightfully yours.
