Five Things You Need to Know About the Supreme Court’s DCAs Decision and the FCA Response

On Friday, after markets closed, the Supreme Court published their decision on three appeal cases concerning commission payments (Discretionary Commission Arrangements) made by lenders to car dealers. Here are five crucial takeaways you need to know:

1. The Supreme Court sided with lenders in two out of the three cases, reversing the earlier rulings. The ruling says that “at no point did the dealer give any kind of express undertaking or assurance to the customer that in finding a suitable credit deal it was putting aside its own commercial interest as seller” – rebutting the earlier judgement which had suggested dealers had a fiduciary duty to put customers needs above their own.
2. But the court did find in favour of the consumer in the “Johnson vs FirstRand Bank” case – they said that the 55% commission payment (based on the total charge including interest and fees) was so high that it was a “powerful indication” that there was an unfair relationship. They awarded the complainant the amount of commission plus interest.
3. If all three cases had gone in favour of the consumers and the (now banned) practice of discretionary commission agreements was declared inherently unfair, there would potentially have been scope for a PPI-level compensation scheme. That scenario, which many were preparing for, is now ruled out. However, with the decision that very large commission agreements were “unfair” there will be many consumers who do qualify for some compensation.
4. The FCA announced on Sunday that they will open a consultation by October on a compensation scheme, and that if that goes ahead the first payments will be made in 2026. That consultation will need to establish rules on which commission payments are and are not unfair and how much compensation should be paid.
5. Right now, in these early stages, the FCA estimates that individual consumers will most likely receive less than £950 per agreement, and that the scheme will cost a total of somewhere between £9 billion and £18 billion.

We know a lot more than we did this time last week about the future of the motor finance complaints situation – but until the outcome of the October consultation and creation of the scheme and the related rules, there is still a lot of uncertainty.

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Find out more about our work in the Complaints space here and for more background on Discretionary Commission Arrangements, read our past coverage here and follow Kind Consultancy on LinkedIn to stay up to date on all of our news.