What were Discretionary Commission Arrangements?
Between 2007 and January 2021, most UK motor finance was arranged through dealers who acted as credit brokers for lenders. Under a Discretionary Commission Arrangement (DCA), the dealer could increase the interest rate charged to the customer in exchange for a larger commission from the lender. The more the rate went up, the more the dealer was paid.
Customers were rarely told this commission existed, and almost never told the dealer had any say in the rate. The Financial Conduct Authority banned DCAs on 28 January 2021 after concluding the arrangement created a clear conflict of interest.
How widespread was this?
DCAs and other undisclosed commission arrangements were the industry standard for over a decade. The FCA estimates the scheme covers roughly 12.1 million in-scope agreements, with total redress in the order of £7.5 billion.
£7.5B
Total expected redress
12.1M
Agreements in scope
£829
Average payout
What did the courts find?
Court of Appeal: October 2024
The Court of Appeal ruled that dealers acted as fiduciary agents of their customers when arranging finance, and that undisclosed commissions were therefore secret commissions, recoverable in full. The decision was widely seen as an existential threat to the motor finance industry as it then existed.
Supreme Court: 1 August 2025
The Supreme Court (Johnson v FirstRand Bank Ltd, [2025] UKSC 33) rejected the broad fiduciary-agency analysis. It held that, as a general rule, dealers do not owe customers a disinterested duty when selecting a credit product. However, it confirmed that the unfair relationship test under section 140A of the Consumer Credit Act 1974 remains available, and that a very large undisclosed commission tied to an exclusivity arrangement (around 55% of the total charge for credit in Johnson) was sufficient to make the relationship unfair.
The FCA's confirmed redress scheme
Following the Supreme Court judgment, the FCA moved quickly.
Two separate schemes
The FCA has structured redress as two schemes:
Scheme 1
Agreements from 6 April 2007 to 31 March 2014
Original deadline: 31 August 2026 (suspended)
Scheme 2
Agreements from 1 April 2014 to 1 November 2024
Original deadline: 30 June 2026 (suspended)
Who is eligible?
You will be considered for compensation if your agreement falls within those dates and at least one of the following applies:
- A Discretionary Commission Arrangement (DCA) was in place and was not properly disclosed
- The commission paid to the dealer amounted to at least 39% of the total cost of credit and 10% of the loan, and was not properly disclosed
- There was a contractual tie giving the lender exclusivity or right of first refusal, not made apparent to you
How is compensation calculated?
Compensation reflects the commission element you would not have paid had the arrangement been properly disclosed, plus interest. The FCA has confirmed the average payout is £829 per agreement, up from approximately £700 at the consultation stage. The increase is because the final interest calculation is more generous than originally proposed.
The interest rate change
The FCA's final rules use 8% simple interest on the redress amount, rather than the lower benchmark rate proposed at consultation. This is the single biggest reason the average payout rose to £829.
What the scheme means for you practically
If you have already complained
Your complaint sits in the priority queue. Lenders must respond within three months of each scheme's implementation deadline, subject to the Upper Tribunal challenges currently in progress.
If you haven't complained yet
You can complain at any time up to 31 August 2027. Lenders are also required to contact eligible non-complainants within six months of implementation. Registering a complaint now means your case is on file ahead of the scheme's implementation deadlines.
There are two ways to participate: wait to be contacted by your lender (free, no action required), or complain directly (also free). Both reach the same FCA scheme.
Key dates
January 2021
FCA bans Discretionary Commission Arrangements
January 2024
FCA launches formal review; complaint pause begins
October 2024
Court of Appeal rules in favour of consumers
1 August 2025
Supreme Court judgment ([2025] UKSC 33)
7 October 2025
FCA publishes redress scheme consultation (CP25/27)
18 November 2025
Consultation closes
3 December 2025
FCA confirms complaint pause will lift 31 May 2026
30 March 2026
FCA publishes final scheme rules (PS26/3)
1 May 2026
Legal challenges filed in Upper Tribunal
8 May 2026
FCA publishes expectations statement; mid-November 2026 planning assumption set
31 May 2026
Complaint handling pause lifts
9 June 2026
FCA letter to Treasury Committee confirms no court date set
11 June 2026
FCA publishes further guidance for firms; contingency planning formally required
October 2026 onwards
Earliest expected Tribunal hearings
Mid-November 2026
FCA planning assumption for Tribunal decision (subject to change)
February to March 2027
Earliest expected compensation for existing complainants (if scheme proceeds and Tribunal rules in November 2026)
Mid-2027
Earliest expected compensation for non-complainants (same assumptions)
31 August 2027
Last date to complain if not contacted by your lender (may shift)