What Is A DCA?

What is a Discretionary Commission Agreement? 

If you are wondering what a discretionary commission agreement is then you have come to the right place. If you financed a car in the UK between January 2008 to January 2021, you probably spoke to a dealer who offered you an agreement for your car that had a hidden discretionary commission arrangement. 

In a nutshell, DCAs were used by dealers, acting as brokers for finance companies, who could discreetly increase or reduce the rate of interest they offered – thereby altering customers’ monthly finance charges – to boost their commission at the expense of their customers. This allowed the dealer to make more money by charging you more interest than they should have. 

Why could your car dealer do this? 

It sounds ridiculous right? Well, your dealer could do this under the now-banned use of ‘dealer discretion’ which is used to increase interest rates at will. 

How does a DCA work? 

If you want to understand exactly what a discretionary commission agreement is, imagine a scenario where you as a customer need to buy a car. The dealer or broker you speak to could offer you a base interest rate. However, increase this rate at their discretion to earn their commission. This leaves you overpaying without knowing. 

Now, if this happened to you, you would have been charged more for your car than you expected. Maybe you didn’t notice the added charge, because you simply did not look at the payment charges as they were taken from your account. The DCA is hidden in a higher interest rate- brokers would advise customers that it is the best deal and would not tell them that it includes DCA. 

Why would your dealer do this? 

Your dealer would have an obvious reason to raise your interest rate because this would count as their commission. They get more money, all from increasing your interest rate. 

Why are discretionary commission agreements problematic? 

The problem around these agreements is linked to their capability to cause conflicts of interest. You as a customer could be led into financial loss as a result. Understandably – consumers and regulators are concerned over this issue. 

Why did I not know about DCA’s? 

These raised interest rates are not clear to those unfamiliar with financial lingo, or contract term knowledge. Therefore it can be the case that those customers who are most vulnerable face higher financial loss due to these raised rates. 

What changed? 

In January 2021, the FCA banned using a discretionary commission agreement, making it illegal for dealers to use them.

Have you been a victim of this banned practice? 

If so, you may have the option to claim compensation for mis-sold car finance. 

How to claim? 

Have you noticed a higher interest rate on your finance agreement that you were unaware of? If so, you may have the option to claim compensation for mis-sold car finance. 

My Car Finance Claim works proudly as a trading style of Barings Law, who offer financial compensation for those victimised by mis-sold car finance loans. 

Click the button below to start your potential claim, using our simple 3-step process. 

What is PCP? Car Finance

Definition of PCP?

PCP essentially means Personal Contract Purchase but under the term of a type of car finance. Alternatively referred to as Personal Contract Hire or Plan. This is not 100% accurate, the official term is Personal Contract Purchase.

Hidden Fees on your PCP Contract?

Personal contract purchase agreements stand as the prevailing financial product for purchasing a car. Providing finance for vehicles for the majority of consumers, these agreements typically involve an initial deposit payment, followed by ongoing monthly payments, and finalising in a final ‘balloon’ payment.

If you entered into such an agreement within the last 10 years, you’re potentially eligible for redress. Barings Law specialise in consumer redress and manages cases for numerous clients across various claim types.

What is a Balloon Payment?

A balloon payment is typically a one off lump sum payment which is much higher than the monthly contributions paid during the contact.

Difference Between a Balloon Payment and a Normal Payment?

A balloon payment is much higher than what you expect to be paying, and set on a monthly basis.

Which Brokers and Dealers can I Claim Against?

Claims are typically directed to the lender who had ultimate control over how the financial arrangements were sold.

Why is the FCA Investigation Important?

In light of the FCA investigation, if you had a PCP or HP agreement between April 2008 – January 2022, you are now eligible to submit a claim.

If your lender is Moneybarn, Oodle, or Advantage then you are not eligible to make a complaint about discretionary commission arrangements. However, Barings Law are spearheading claims around affordability of the finance agreements so you may still be able to make a claim.

How to Claim?

Making a claim with us is easy and simple. With just a few details you can begin an application today. Enter your registration into our automatic number recognition system to get started.

What is the 3-Step Process?

Submit your details

Start by simply entering your details on our 3 step form

Our experts get to work

We have an experienced team of legal professionals, meticulously analysing and pursuing your claim

Get your funds back

Where we can successfully complete your claim, we will ensure your funds are transferred promptly

What is a Mis-Selling Example Case?

In 2018, a mystery shopper investigation by the FCA, found that only 11 dealerships out of 122 accurately disclosed the commissions they earned to the customer. Broker sales teams often set their own interest rates; which means the higher the rate, the higher the commission they received. The FCA banned this practice in January 2021 as it was a clear conflict of interest and provided unfair terms to the customer.

Is There a Cut-off Point to Claim?

You can still claim, even if your agreement has ended.

My Contract is Ongoing, Can I Still Claim?

If you took out an agreement before the ban of discretionary agreements in 2021 but it is still ongoing, you are eligible to claim.

Can I Claim for More Than One PCP/HP Contract?

Yes, you can claim for any of the following:

PCP or HP agreements you have had between April 2008-January 2022, or 2023, dependent on which lender you financed with.

How Much Compensation Will you Receive?

The compensation amount will vary on a case by case basis.

How is Your Claim Identified as Successful?

Barings Law reviews thousands of potential claims regarding financial regress. The key in determining if the case holds potential lies in the process of putting back together the deal background which hides the inappropriate practices of those arranging the finance. Consider the following:

Were you aware of the commission the dealership would receive?
Did the dealer clearly explain the different finance options available?
Could you afford the credit agreement at the time of the sale?

How Much will a Claim Cost?

We are proud to offer a no-win no-fee service. We ask for nothing upfront and in the event that your claim is unsuccessful, you won’t have to pay a penny.

Who is My Car Finance Claim?

My Car Finance Claim is a trading style with Barings Law, who proudly makes legal representation accessible for everyone. We take on our clients on a no-win no-fee basis. We always have our clients’ interests at heart and all we ask in return is that our clients cooperate with us throughout the process.

How Do My Car Finance Claim Get Your Compensation?

My Car Finance Claim specialises in financial redress claims. We have a proven track record in bringing successful claims against some of the UK’s biggest car finance providers.

Follow our simple 3-step journey and our team are here to do the rest. We will contact your lenders and obtain the relevant information to assess the validity of your claim. Our aim is to resolve things swiftly and where appropriate, get the compensation that you deserve. Start your claim with us today and let our experienced team guide you through the process.

What Do You Need to Start a Claim?

If you don’t have all of the information at hand, don’t worry! All we need to start the process of identifying if you have a potential claim is a few personal details; proof of address, and your finance agreement.

Why are PCP’s so High in Demand?

PCP contracts are high in popularity with customers as they give you the option to buy a car for worth more, lower monthly price than you could get with a conventional, or standard hire purchase or a personal loan.

PCP agreements are popular with manufacturers and dealers as this option fast tracks consumers into buying a fresh car every number of years. In turn, this significantly raises their chances of getting continuous business.

What Do You Need to Start a Claim?

If you don’t have all of the information at hand, don’t worry! All we need to start the process of identifying if you have a potential claim is a few personal details; proof of address, and your finance agreement.

What is GFV / Final Payment / Balloon Payment?

The guaranteed future value (GFV) is the amount that the finance company promises they will value the car at when your PCP comes to an end. That amount is exactly the same as the balloon amount, meaning that you can give the car back to the finance company without having to pay off the balloon. So the GFV covers the balloon, but it’s a different thing and only applies at the end of an agreement.

The balloon is the final instalment on a PCP, often thousands of pounds. This is the amount you must pay to settle the finance on the car to take clear title (this means to clear your debt to the finance company so that you can officially own the car) If you breach your contract and the finance company refuses to honour the GFV, you are still required to pay the final balloon payment.

How to Claim for PCP?

Making a claim, with My Car Finance is a simple 3 step process. With just a few details, you can begin an application today. Enter your registration into our automatic number recognition system to get started. Click the button below to begin!