Motor Finance Discretionary Commission Arrangements: 3 Key Actions for Firms to Take Now

There’s a sense of déjà vu in the motor finance industry. Discretionary Commission Arrangements (DCAs), long thought to be yesterday’s issue, are suddenly front and centre again. Following a spike in consumer complaints and DSARs, the FCA launched a formal review in January 2024 into historic motor finance commission models. Their intention is clear:

“ We're using our powers under s166of the Financial Services and Markets Act 2000, to review sales of historical motor finance commission arrangements across several firms. — Financial Conduct Authority, January 2024 

In October 2024, the Court of Appeal ruled that dealers receiving commission payments without full disclosure had acted unlawfully — a landmark decision that is now being appealed in the Supreme Court, with a judgment expected by mid‑2025. The outcome of that ruling will significantly shape what happens next.

Meanwhile, the scale of the issue continues to grow. In response to escalating volumes of consumer complaints — many prompted by claims management companies — the FCA has extended its pause on final response deadlines for both DCA and non‑DCA complaints until 4 December 2025.

And the implications could be huge. The FCA has stated its intention to consult on an industry-wide redress scheme by October 2025, with potential payouts beginning in 2026. Early estimates suggest total liabilities could fall between £9 billion and £18 billion, with average redress payments expected to be under £950 per customer.

What comes next is uncertain. But that doesn’t mean firms should sit still. In fact, the opposite is true. This isn’t a time for panic. It’s a time for preparation.

Here’s how we’re advising firms to get ahead of the risk, stay in control, and remain compliant while the industry waits for more formal conclusions from the regulator.

Actions Firms Can Take Now

1. Respond to the Spike

Complaints and DSAR volumes are increasing. Many will be scattergun—issued by CMCs or individuals without clear eligibility. But even if the majority result in no redress, the operational strain is very real.

Right now, every firm should have a clear intake and triage process for complaints. Final response deadlines may be extended, but the requirement to acknowledge and manage complaints and DSARs hasn’t changed.

Where internal teams don’t have the capacity, consider specialist interim support. Especially in high-friction areas like audio transcription, document retrieval, and data sorting. The earlier these are in place, the less risk you carry downstream. 

2. Assess Your Exposure

This part matters. To respond well to whatever outcome emerges from the FCA review, firms need to understand where their exposure and how it might evolve. 

Start by building a forensic view of your backbook. Go deep and go long: some DCA arrangements date back to 2007. Then segment that book by value, customer vulnerability, and any recovery action taken. From there, you can start building risk-based cohorts.

When exposure is modelled properly, you gain the flexibility to act fast. You can prioritise resource. You can communicate clearly. And you can engage with regulators or third parties from a position of control. 

3. Plan for Scenarios

No one knows yet whether this will end in a proactive redress programme or a wave of consumer-led complaints. Either way, scenario planning should be underway now. If it’s industry-led, be ready to answer these questions:

• Who will lead the response?
• What delivery models can we scale?
• How robust are our records, data flows and contact channels?

If it’s consumer-led, ensure your complaints functions are properly resourced. Have you got the right platforms, QA processes and teams to handle complex claims quickly and sensitively? This won’t be slow and steady like PPI. It will likely come fast and hard. Having a plan in place won’t just protect your operations. It will protect your customers too. 

Quality of Resourcing Matters

We’ve seen the difference good people make. And we’ve seen what happens when firms choose the wrong delivery partner.

Whether you scale internally, use external consultancies, or deploy hybrid models, the quality of your people and controls is everything.

Poor hiring or light-touch vetting can quickly erode programme credibility. We’ve reviewed CVs that don’t stand up, and watched offshore teams struggle to manage UK regulatory nuance.

Firms need resourcing plans that are:

• Scalable
• Quality-assured
• Context-aware

And above all, built for the kind of complex, high-stakes delivery programmes we’re now facing. 

Final Word

You don’t need to commit to a redress position yet. But you do need to act. Use this time wisely. Put the right systems, partners and models in place now, so you’re not working in chaos later.

The risk is real. But so is the opportunity to lead with clarity.

Watch the Breakdown

In this short video, we walk through the key points from this article: