Discretionary vs Fixed Commission: What They Mean for Car Finance Claims in 2026

Discretionary commission arrangements (DCAs) allowed car dealers to raise your interest rate to earn more commission, while fixed commission paid the dealer a set amount regardless of rate. Under the FCA’s 2026 redress scheme, DCAs are automatically reviewed for compensation, while fixed commission claims only qualify where commission was “high” at least 39% of the total cost of credit and 10% of the loan.

Why This Difference Matters Right Now

The distinction between discretionary and fixed commission is arguably the single most important factor in your car finance claim. Get it right, and you understand exactly why you may be owed compensation. Get it wrong, and you risk missing eligibility entirely.

In 2026, this matters more than ever. According to the FCA, approximately 12.1 million agreements made between April 2007 and November 2024 are eligible, with an estimated £7.5 billion in total redress. However, not every agreement qualifies the same way. Furthermore, the type of commission paid to your broker fundamentally changes how your claim is assessed.

Therefore, understanding these two commission structures is the first step towards knowing whether you’re owed money.

What Is a Discretionary Commission Arrangement (DCA)?

A discretionary commission arrangement gave the car dealer or broker the power to set your interest rate within a range agreed with the lender. Crucially, the higher the rate they chose, the more commission they earned.

As a result, dealers had a direct financial incentive to charge you more. Most customers had no idea this was happening.

The FCA banned DCAs in January 2021. However, the damage had already been done across millions of agreements between 2007 and that ban date.

Under the 2026 scheme, discretionary commission arrangements: Adequate disclosure required firms to disclose how the broker’s commission was linked to the interest rate charged and that the broker had discretion to select the rate within a range set by the firm Global Regulation Tomorrow. In practice, almost no lender or dealer made this disclosure properly.

Typical DCA Warning Signs

• Your interest rate seemed unusually high compared to advertised rates
• No one explained how the dealer’s commission was calculated
• The agreement ran between April 2007 and January 2021
• You used PCP or Hire Purchase finance through a dealership

What Is Fixed (Flat) Commission?

Fixed commission — sometimes called flat fee commission — paid the dealer a set amount for arranging your finance. The amount didn’t depend on your interest rate or how much you borrowed. Consequently, the dealer had no incentive to manipulate your rate.

However, that doesn’t automatically mean fixed commission was fair. Many fixed commissions were still extremely high, and customers weren’t told how much the dealer was being paid.

Under PS26/3, fixed commission becomes a potential claim only when it crosses the “high commission” threshold. Specifically, the FCA confirmed that the commission was high – at least 39% of the total cost of credit and 10% of the loan FCA.

Am I Eligible to Claim?

You may be eligible if one of the following applies:

• You had a discretionary commission arrangement (DCA) that wasn’t clearly explained
• You paid high fixed commission (at least 39% of total cost of credit AND at least 10% of the loan)
• Your broker had a tied arrangement giving one lender exclusivity or first refusal
• Your agreement ran between 6 April 2007 and 1 November 2024
• You used PCP or Hire Purchase to finance a car, van, motorbike, or campervan

However, some exclusions apply. According to the FCA, the commission was £120 or less for agreements beginning before 1 April 2014 and £150 or less from that date. Commission amounts below those levels are unlikely to have influenced the broker’s behaviour or consumer’s decision FCA.

In addition, agreements with 0% APR are excluded from the scheme.

DCA vs Fixed Commission: Side-by-Side

Feature	Discretionary Commission (DCA)	Fixed Commission
How it worked	Dealer chose your interest rate within a range	Dealer received a set fee regardless of rate
Incentive to inflate rate?	Yes — direct financial gain	No — commission unaffected by rate
Banned?	Yes, January 2021	Still legal if properly disclosed
Claim basis	Inadequate disclosure of DCA structure	Only if commission was “high” (≥39% TCC and ≥10% loan)
Typical redress tier	Often Hybrid Remedy or Johnson-tier	Hybrid Remedy, subject to cap

What Compensation Could You Receive?

Compensation under PS26/3 depends heavily on which type of commission applied. According to the FCA, the scheme provides an average compensation of £830 per agreement, a minimum 3% compensatory interest rate, and caps on payouts for roughly one-third of cases.

Commission Scenario	Redress Range (£)	Notes
Undisclosed DCA, standard case	£400–£1,500	Hybrid Remedy: average of estimated loss and commission paid, plus interest
High fixed commission, disclosed properly	£0	Lender can exclude if commission fact was clearly disclosed
High fixed commission, not disclosed	£500–£2,500	Hybrid Remedy applies
DCA + tie + very high commission	£2,000–£7,500+	Full commission refund plus interest, no cap

These figures are estimates based on FCA published data and are indicative only. Your actual award depends on the specific facts of your case.

Notably, around 90,000 consumers whose cases align closely with the Johnson case considered by the Supreme Court will receive redress of all commission plus interest FCA. These are the highest-value claims.

How the Claims Process Works

1. Contact National Claims — share what you remember about your finance agreements
2. We connect you with experienced solicitors who specialise in motor finance redress
3. Your solicitor reviews agreement documents to identify DCA or high fixed commission
4. A formal complaint is submitted to the lender within scheme deadlines
5. The lender assesses your case against FCA criteria and calculates redress
6. You receive a redress decision — accept or challenge within one month
7. Payment is issued within one month of acceptance

Critical Deadlines

• 30 June 2026 — deadline for post-April 2014 agreements (Scheme 2)
• 31 August 2026 — deadline for pre-April 2014 agreements (Scheme 1)
• 31 August 2027 — final deadline for consumers not contacted by their lender

Why Choose National Claims?

• Commission-structure expertise — we identify DCA and high-commission cases that lenders may overlook
• Connection to experienced solicitors who handle complex motor finance claims daily
• No upfront costs to start your claim
• Multi-agreement support — if you had several finance deals, we pursue each one separately

People Also Ask

Q: How do I know if my car finance had a discretionary commission?

A: Most agreements signed between 2007 and January 2021 through a dealership used a DCA. Your paperwork rarely stated it directly. Therefore, the easiest route is requesting your agreement from the lender and having a solicitor review the commission structure.

Q: Can I claim if my commission was fixed rather than discretionary?

A: Yes — but only if the commission was “high.” Under PS26/3, this means at least 39% of the total cost of credit and at least 10% of the loan value, and only if the fact of commission wasn’t clearly disclosed.

Q: Will I receive more compensation for a DCA claim than a fixed commission claim? A: Typically, yes. DCA cases are more likely to qualify for the Hybrid Remedy or Johnson-tier redress. Fixed commission claims require a higher threshold to prove unfairness and are subject to more exclusions.

Q: What if my lender says my agreement didn’t have a DCA? A: You can challenge the decision through the Financial Ombudsman Service. You can also instruct a solicitor to review the commission arrangement independently, as lenders don’t always disclose the full picture upfront.

Q: Do I need to know my commission type before making a claim? A: No. Your solicitor will identify the commission structure during case review. You simply need to confirm your finance dates, lender, and vehicle details to get started.

Start Your Claim Today

Don’t wait while your claim window closes. Speak with National Claims today. We’ll connect you with experienced solicitors who understand your case and fight for the maximum compensation you deserve.

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