If you took out car finance before January 2021, you could be due compensation. The FCA is investigating discretionary commission arrangements (DCAs) which were included in many car finance agreements. Here’s how to find out if you’re eligible for compensation and what to do next.
DCAs are now banned – you could be due compensation
In January 2021, the Financial Conduct Authority (FCA) banned DCAs in motor finance agreements. DCAs were a hidden type of commission that allowed dealers and brokers to increase the commission they earned by charging customers more.
In January 2024, the FCA started an investigation to decide if affected customers should be paid compensation. The FCA plans to complete this by May 2025.
Alongside this, an upcoming Supreme Court case will decide whether all hidden commissions – not just DCAs - in car finance may have been unlawful. This could mean more compensation is due to customers – learn more about this in our guide Complaints about hidden commissions in car finance.
Who can claim compensation?
You could be due compensation if:
you took out motor finance before 28 January 2021 (including cars, vans, campervans and motorbikes)
your agreement was either a Personal Contract Purchase (PCP) or Hire Purchase (HP)
your vehicle was bought for personal use
your agreement included a DCA.
How do I know if my agreement included a DCA?
If possible, you should look through your car finance paperwork to see if your agreement included a DCA. If you’re not sure, you can ask your lender.
If your lender won’t tell you, you can still complain. It’ll be up to your lender to investigate whether your agreement included a DCA.
Some firms have claimed that they never used DCAs. You can see a list of companies not using DCAsOpens in a new window on MoneySavingExpert.
Use a free complaint letter template
If you’re thinking of complaining, it’s a good idea to use a free template letter so that you don’t need to pay a claims management company.
The free template letter availableOpens in a new window on MoneySavingExpert can be used to both complain and check if you were sold finance with a DCA.
How much could I have overpaid if my finance had a DCA?
To estimate how much customers overpaid, the FCA looked at a typical finance agreement of £10,000. In their example, a DCA would have cost the customer around £1,100 more in interest charges overall.
So it’s possible that you’ve overpaid as much as thousands – but it’s not certain that the FCA will order companies to pay back the full amount.
What if my agreement didn’t include a DCA?
You might still be able to get compensation, but it depends on the outcome of a separate Supreme Court judgement about all types of hidden commissions. This ruling could be as late as Spring 2025.
Check our guide Complaints about hidden commissions in car finance to see if you could still make a complaint.
How to make a complaint
Why you should avoid using a claims management company
You might have seen adverts for companies who can complain on your behalf. These companies normally take a large cut of any compensation – up to 30%.
If possible, handle the complaint yourself so that any compensation goes straight to you. You can use a free complaint template to help.
It might seem daunting but it’s a simple process that could save you £100s. A claims management company won’t be any quicker or do anything you can’t do yourself.
Step one: Complain to your lender
Gather any information about your car finance. Then complain to your lender, ideally in writing.
You’ll need to complain to the firm you were paying each month. If you’re not sure who that is, you can check your credit report (if the agreement was active in the past six years) or old bank statements if you have them.
Tell the lender you think you’ve been overcharged and include as much information as you have. There are free templates you can use to complain on:
Step two: wait for a response
You should get a response from the lender to confirm that they’ve received your complaint within a few weeks. If you don’t hear anything, contact the firm again to check if they received it.
Ideally, your lender will then respond to let you know if you had a DCA. However, the FCA has given firms extra time to respond to complaints, so you might not hear back for a while.
What you do next depends on the response you get:
If your agreement had a DCA, you don’t need to do anything more for now – when the FCA decides on compensation, your lender should process this for you.
If your agreement didn’t have DCA, you might still be able to complain about undisclosed commission – check our guide on complaining about car finance commission.
If your lender doesn’t give you any further response, don’t worry. As long as your complaint has been acknowledged, if the FCA decides you are due compensation this should be processed by your lender.
You can get step-by-step information about when you can expect a response by using the FCA’s car finance complaint toolOpens in a new window
Step three: escalate your complaint to the ombudsman if you need to
If you don’t get any response at all, or you disagree with the lender’s response regarding DCA, you can take your complaint to the free Financial Ombudsman Service (FOS)Opens in a new window
What happens next?
Once your complaint has been logged (either by your lender or the FOS), you won’t need to do anything more for now.
What happens next depends on the FCA’s investigation into DCAs. They’re likely to provide an update in May 2025, but it’s not guaranteed that they’ll have decided on compensation by then.
The FCA might set a time limit on when complaints can be submitted – so it’s a good idea to make a complaint before too long.
How long do lenders have to respond to complaints?
The FCA has extended the time which lenders have to respond to complaints.
If you complained before 17 November 2023 – you should have received a response within eight weeks of submitting your complaint. If you didn’t, you can take your complaint to the Financial Ombudsman ServiceOpens in a new window
If you complained between 17 November 2023 and 10 January 2024 – the usual eight week timeframe has been paused until 4 December 2025. This means that your lender has until at least then to respond.
If you complained (or plan to complain) after 10 January 2024 – your lender has until 30 January 2026 to respond to your complaint.
Your lender should still confirm that they’ve received your complaint, and you could get a response before the deadline.
If you disagree with the response to your complaint
If your complaint is rejected by the lender or you’re unhappy with the response, you have the option of taking your complaint to the free Financial Ombudsman Service (FOS)Opens in a new window
How long you have to take your complaint to the FOS depends on when you originally complained:
If you complained before 17 November 2023 – you’ll need to complain to FOS by the date given in the final response you received. If you didn’t get a final response, you can still take your complaint to FOS.
If you complained on or after 17 November 2023 – you’ll need to complain either by 29 July 2026 or 15 months after receiving your final response, whichever is later.