DISCOVER FINANCIAL SERVICES CHANGE IN CONTROL SEVERANCE POLICY

Exhibit 10.6

DISCOVER FINANCIAL SERVICES

CHANGE IN CONTROL SEVERANCE POLICY

Effective September 21, 2007

TABLE OF CONTENTS

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This change in control severance policy (the “Policy”) is established by Discover Financial Services, a Delaware corporation, to (i) enable Discover to secure for the benefit of the Company the services of the Eligible Executives in the event of a Change in Control without concern for whether such executives might be hindered in discharging their duties by the personal uncertainties and risks associated with a Change in Control, by affording such executives the opportunity to protect the share value they have helped create as of the date of any Change in Control and (ii) offer income protection to such executives in the event their employment terminates involuntarily or for Good Reason in connection with a Change in Control. The Policy also provides income protection to Eligible Employees who enter into non-competition agreements with the Company following their termination of employment in connection with a Change in Control.

This Policy shall constitute a “welfare plan” within the meaning of Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and shall be construed in a manner consistent with such intent.

The effective date of this Policy is September 21, 2007 (the “Effective Date”).

The following terms when used in this Policy and capitalized shall have the respective meanings set forth below:

Base Salary means the Eligible Executive’s current annualized rate of gross base cash compensation as paid on each regularly scheduled payday for the executive’s regular work schedule as of his or her Termination Date. Base Salary shall not include taxable or nontaxable fringe benefits or awards, vacation, performance awards, bonus, commission or other incentive pay, or any payments which are not made on each regular payday, regardless of how such payments may be characterized.

Board means the Board of Directors of Discover.

Cause means:

(a) any act or omission which constitutes a material breach of an Eligible Executive’s obligations to the Company or an Eligible Executive’s failure or refusal to perform satisfactorily any duties reasonably required of an Eligible Executive, which breach, failure or refusal (if susceptible to cure) is not corrected (other than failure to correct by reason of an Eligible Executive’s incapacity due to Disability) within ten (10) business days after written notification thereof to the Eligible Executive by the Company;

(b) any act or omission by an Eligible Executive that constitutes (i) fraud or intentional misrepresentation, (ii) embezzlement, misappropriation or conversion of assets of, or business opportunities considered by, the Company or (iii) any other act which has caused or may reasonably be expected to cause material injury to the interest or business reputation of the Company; or

(c) violation by an Eligible Executive of any securities, commodities or banking laws, any rules or regulations issued pursuant to such laws, or rules or regulations of any securities or commodities

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exchange or association of which the Company is a member or of any policy of the Company relating to compliance with any of the foregoing.

Change in Control means, except as provided otherwise below, the first to occur of any of the following events:

(a) any person (as defined in Section 3(a)(9) of the Exchange Act, as such term is modified in Sections 13(d) and 14(d) of the Exchange Act), other than (i) any employee plan established by the Company or any of its Subsidiaries, (ii) any group of employees holding shares subject to agreements relating to the voting of such shares, (iii) the Company or any of its affiliates (as defined in Rule 12b-2 promulgated under the Exchange Act), (iv) an underwriter temporarily holding securities pursuant to an offering of such securities, or (v) a corporation owned, directly or indirectly, by stockholders of the Company in substantially the same proportions as their ownership of the Company, is or becomes the beneficial owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such person any securities acquired directly from the Company or its affiliates other than in connection with the acquisition by the Company or its affiliates of a business) representing thirty percent (30%) or more of either the total fair market value or total voting power of the stock of the Company;

(b) a change in the composition of the Board such that individuals who, as of the date of an Eligible Executive’s termination of employment, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a member of the Board subsequent to the date of an Eligible Executive’s termination of employment whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board;

(c) the consummation of a merger or consolidation of the Company with any other corporation or other entity, or the issuance of voting securities in connection with a merger or consolidation of the Company (or any direct or indirect subsidiary of the Company) pursuant to applicable stock exchange requirements, other than (i) a merger or consolidation which results in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries, at least fifty percent (50%) of the combined voting power of the voting securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no person (determined pursuant to clause (a) above) is or becomes the beneficial owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such person any securities acquired directly from the Company or its affiliates other than in connection with the acquisition by the Company or its affiliates of a business) representing thirty percent (30%) or more of either the then outstanding shares of the Company’s common stock or the combined voting power of the Company’s then outstanding voting securities;

(d) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets

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to an entity, at least fifty percent (50%) of the combined voting power of the voting securities of which are owned by persons in substantially the same proportions as their ownership of the Company immediately prior to such sale; or

(e) any sale by Discover of all or substantially all of its interest in the U.K. Business.

Provided that a Change in Control of the U.K. Business shall not be deemed to be a Change in Control with respect to Discover.

Notwithstanding the foregoing, no Change in Control of Discover shall be deemed to have occurred if there is consummated any transaction or series of integrated transactions immediately following which the beneficial holders of the Company’s common stock immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns substantially all of the assets of the Company immediately prior to such transaction or series of transactions.

Change in Control Severance Benefits means the benefits payable to an Eligible Executive pursuant to Section 7 of this Policy.

Committee means the Compensation Committee of the Board or its delegate or successor.

Company means Discover Financial Services and all its Subsidiaries, and any successor thereto (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise, including, without limitation, any successor due to a Change in Control) to the business or assets of Discover, except that for purposes of Section 16 hereof, the definition of Change in Control and other provisions where the context so requires, Company means Discover or any such successor thereto.

Competitive Activity means:

(a) becoming, or entering into any arrangement as, an employee, officer, partner, member, proprietor, director, independent contractor, consultant, advisor, representative or agent of, or serving in any similar position or capacity with, a Competitor, where an Eligible Executive will be responsible for providing, or managing or supervising others who are providing, services (i) that are similar or substantially related to the services that the Eligible Executive provided to the Company, or (ii) that the Eligible Executive had direct or indirect managerial or supervisory responsibility at the Company, or (iii) that calls for the application of the same or similar specialized knowledge or skills as those utilized by the Eligible Executive in his or her services for the Company, in each such case, at any time during the year preceding the termination of the Eligible Executive’s employment with the Company; or

(b) either alone or in concert with others, forming, or acquiring a five percent (5%) or greater equity ownership, voting interest or profit participation in, a Competitor.

Competitor means any corporation, partnership or other entity that engages in (or that owns a significant interest in any corporation, partnership or other entity that engages in) (i) the business of consumer lending, including, without limitation, credit card issuance or electronic payment services or (ii) any other business in which the Eligible Executive has been involved in or had significant knowledge of, which has been conducted by the Company at any time during the Eligible Executive’s employment with the Company. For the avoidance of doubt, a competitor of any entity which results from a corporate transaction involving the Company that constitutes a Change in Control shall be considered a Competitor for purposes of this Policy.

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Disability means a “permanent and total disability” as defined in Section 22(e)(3) of the Internal Revenue Code.

Discover means Discover Financial Services, a Delaware corporation.

Eligible Executive means an Executive Committee Member or an individual who holds the title of Vice President or Director with respect to (a) Discover or the (b) U.K. Business, in both cases, on the earlier of his or her Termination Date and the date of a Change in Control or at any time during the six (6) months immediately preceding the occurrence of a Change in Control.

Exchange Act means the Securities Exchange Act of 1934, as amended.

Executive Committee Member means an individual who is a member of Discover’s Executive Committee.

Good Reason means the occurrence of any of the following upon, or within six (6) months prior to or twenty-four (24) months after the occurrence of, as applicable, a Change in Control of Discover where an Eligible Executive is employed or the U.K. Business where an Eligible Executive is employed, without the Eligible Executive’s prior written consent:

(a) (i) any material diminution in an Eligible Executive’s assigned duties, responsibilities and/or authority, including the assignment to an Eligible Executive of any duties, responsibilities or authority inconsistent with the duties, responsibilities and authority assigned to the Eligible Executive immediately prior to such assignment, an Eligible Executive’s removal from, or any failure to re-elect an Eligible Executive to, any of such positions, except in connection with the termination of an Eligible Executive’s employment as a result of his or her death or Disability, by the Company for Cause or by an Eligible Executive other than for Good Reason or (ii) a material diminution in the authority, duties, or responsibilities of the supervisor to whom an Eligible Executive is required to report;

(b) any material reduction in an Eligible Executive’s base compensation, including the employee benefits provided to him or her; provided, however, that Company-initiated across-the-board reductions in compensation or benefits affecting substantially all eligible Company employees shall alone not be considered “Good Reason,” unless the compensation or benefits reductions exceed twenty percent (20%) of his or her base compensation;

(c) a material diminution of the budget over which an Eligible Executive has authority;

(d) the Company’s requiring an Eligible Executive to be based at a location that (i) is in excess of thirty-five (35) miles from the location of his or her principal job location or office immediately prior to the Change in Control, or (ii) results in an increase in his or her normal daily commuting time by more than ninety (90) minutes, except for required travel on Company’s business to an extent substantially consistent with his or her then present business travel obligations; or

(e) any other action or inaction that constitutes a material breach by the Company of any agreement pursuant to which an Eligible Executive provides services to the Company.

For purposes of this definition, the duties, responsibilities and/or authority assigned to an Eligible Executive shall be deemed to be the greatest of those in effect prior to or after the Change in Control. Unless an Eligible Executive becomes Disabled, the Eligible Executive’s right to terminate his or her employment for Good Reason shall not be affected by his or her incapacity due to physical or mental illness. The Eligible Executive’s continued employment shall not constitute consent to, or a waiver of

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rights with respect to, any circumstance constituting Good Reason. Notwithstanding the foregoing, Good Reason shall not exist unless the Eligible Executive gives the Company written notice thereof within 30 days after its occurrence and the Company shall not have remedied the action within 30 days after such written notice.

Incentive Compensation Plans means the Discover Financial Services Omnibus Incentive Plan and any other similar plan maintained from time to time by the Company.

Internal Revenue Code means the United States Internal Revenue Code of 1986, as amended, and the rules, regulations and guidance thereunder.

Plan Administrator means the Committee.

Named Fiduciary means (a) the Committee, (b) another fiduciary designated in writing by the Company as a Named Fiduciary, and (c) any successor to any of the foregoing.

Non-competition Benefits means the benefits payable to an Eligible Executive pursuant to Section 8 of this Policy.

Subsidiary means (a) a corporation or other entity with respect to which Discover, directly or indirectly, has the power, whether through the ownership of voting securities, by contract or otherwise, to elect at least a majority of the members of such corporation’s board of directors or analogous governing body, or (b) any other corporation or other entity in which Discover, directly or indirectly, has an equity or similar interest and which the Committee designates as a Subsidiary for purposes of the Policy.

Termination Date means the date on which the Eligible Executive’s employment with the Company terminates for a reason set forth under Section 5.

United Kingdom (U.K.) Business means the Company’s U.K. credit card issuing business.

Vice President means an individual who is not an Executive Committee Member and who holds the title of Executive Vice President, Senior Vice President or Vice President with respect to (a) Discover or the (b) U.K. Business, in both cases, on the earlier of his or her Termination Date and the date of a Change in Control or at any time during the six (6) months immediately preceding the occurrence of a Change in Control.

All Eligible Executives who have been on the Company’s or a Company Subsidiary’s payroll prior to the earlier of his or her Termination Date and the date of a Change in Control shall be eligible to receive benefits according to the terms of this Policy.

An Eligible Executive shall have a right, subject to the terms of this Policy, to Change in Control Severance Benefits and Non-competition Benefits upon termination of the Eligible Executive’s employment with the Company during the period commencing six (6) months prior to and ending twenty-four (24) months after the date of (i) the Change in Control of Discover or (ii) for an Eligible Executive who is employed by a Subsidiary registered in the U.K., the Change in Control of the U.K. Business by (i) action by the Company (including in the case of an Eligible Executive employed by a Subsidiary, action by such Subsidiary) to involuntarily terminate the employment of an Eligible Executive with the

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Company (and its Subsidiaries) other than for Cause, (ii) voluntary termination of employment by an Eligible Executive for Good Reason or (iii) termination of employment due to the death or Disability of an Eligible Executive.

A non-eligible termination reason is any reason for an Eligible Executive’s termination of employment by the Company that is not an Eligible Termination Reason described in Section 5.

All provisions of this Section shall be subject, without limitation, to the provisions of Sections 10, 11, 12 and 13 hereof.

(a) Change in Control Severance Pay . If an Eligible Executive is entitled to Change in Control Severance Benefits under this Policy, the Company shall pay the Eligible Executive the following amounts based on the Eligible Executive’s position at the time of his or her Termination Date:

(A) An amount equal to 1.5 multiplied by the sum of (i) the Eligible Executive’s Base Salary and (ii) the average cash bonus paid to the Eligible Executive with respect to the three (3) immediately preceding years, or if lesser, the number of years the executive has been employed by the Company, pursuant to the Company’s Incentive Compensation Plans.

(B) A prorated amount of the Eligible Executive’s target cash bonus under the Company’s Incentive Compensation Plans (or, if no target cash bonus has been established for such executive, the cash bonus amount determined under Section 7(g)) for the year in which the Termination Date occurs. Such prorated amount shall be equal to the product of (1) the Eligible Executive’s target cash bonus for the year in which the Termination Date occurs and (2) the ratio of the number of days elapsed during such year prior to the Termination Date to 365.

(A) An amount equal to the sum of the Eligible Executive’s Base Salary and the average cash bonus paid to the Eligible Executive with respect to the three (3) immediately preceding years, or if lesser, the number of years the executive has been employed by the Company, pursuant to the Company’s Incentive Compensation Plans.

(B) A prorated amount of the Eligible Executive’s target cash bonus under the Company’s Incentive Compensation Plans (or, if no target cash bonus has been established for such executive, the cash bonus amount determined under Section 7(g)) for the year in which the Termination Date occurs. Such prorated amount shall be equal to the product of (1) the Eligible Executive’s target cash bonus for the year in which the Termination Date occurs and (2) the ratio of the number of days elapsed during such year prior to the Termination Date to 365.

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(A) An amount equal to the sum of the Eligible Executive’s Base Salary and the average cash bonus paid to the Eligible Executive with respect to the three (3) immediately preceding years, or if lesser, the number of years the executive has been employed by the Company, pursuant to the Company’s Incentive Compensation Plans.

(B) A prorated amount of the Eligible Executive’s target cash bonus under the Company’s Incentive Compensation Plans (or, if no target cash bonus has been established for such executive, the cash bonus amount determined under Section 7(g)) for the year in which the Termination Date occurs. Such prorated amount shall be equal to the product of (1) the Eligible Executive’s target cash bonus for the year in which the Termination Date occurs and (2) the ratio of the number of days elapsed during such year prior to the Termination Date to 365.

(b) Continued Health Benefits Coverage . If an Eligible Executive is entitled to Change in Control Severance Benefits under this Policy, the Company shall give the Eligible Executive and his or her eligible dependents the opportunity to elect continued group health coverage under the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended (“COBRA”) with respect to all group health plans in which the Eligible Executive and his or her dependents were participating immediately prior to such termination. Provided that the Eligible Executive (and/or his or her dependents) timely elects such coverage, the Company shall as soon as practicable thereafter pay to the Eligible Executive, as an additional Change in Control Severance Benefit, a lump sum approximately equal to the difference in cost between COBRA premiums and active employee premiums for twenty-four (24) months of coverage, in the case of an Eligible Executive with the title of Executive Committee Member or Vice President on his or her Termination Date, and twelve (12) months of coverage, in the case of an Eligible Executive with the title of Director on his or her Termination Date, as calculated by the Company in its discretion as of the Termination Date, which payment shall constitute taxable income to the Eligible Executive and which shall be paid in a lump sum on the first date in which the Eligible Executive begins to receive Change in Control Severance Benefits payments under this Policy. An Eligible Executive receiving Change in Control Severance Benefits under this Policy shall not be entitled to receive any other perquisites after such date. Notwithstanding the foregoing, the executive’s continued group health coverage under this subsection shall cease as of the date the executive becomes eligible to receive such benefits under a subsequent employer’s benefit programs, to the extent permitted under COBRA.

(c) Equity-Based Awards . If an Eligible Executive is entitled to Change in Control Severance Benefits under this Policy, all outstanding equity-based awards granted to the Eligible Executive under the Company’s Incentive Compensation Plans (including but not limited to grants of nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock unit and performance awards) shall, notwithstanding any contrary provisions contained in any agreement relating thereto, become fully vested and exercisable or payable and any applicable performance period shall lapse and performance shall be deemed to be satisfied at the target level (or, if greater, based upon actual performance), in each case, as of the later of the effective date of the Change in Control and the date of the Eligible Executive’s Termination Date. In addition, the Eligible Executive shall be deemed to remain employed by the Company for the purposes of such awards until the expiration of the original term of the award.

(d) Outplacement . If an Eligible Executive is entitled to Change in Control Severance Benefits under this Policy, the Company shall provide outplacement services selected by the Company for a period of twenty-four (24) months, in the case of an Eligible Executive with the title of Executive Committee Member or Vice President on his or her Termination Date, and twelve (12) months, in the case of an Eligible Executive with the title of Director on his or her Termination Date. Under no

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circumstances shall any Eligible Executive be eligible to receive a cash payment in lieu of outplacement services.

(e) Legal Fees . If an Eligible Executive makes a claim under Section 19 hereof or commences litigation and as a result thereof, whether by judgment or settlement, becomes entitled to receive benefits in an amount greater than prior to such claim or litigation, the Company shall pay the reasonable legal fees and related expenses incurred by the Eligible Executive in connection with such claim or litigation.

(f) Multiple Positions . If an Eligible Executive holds more than one of the positions described in the preceding subsections (a), (b), and (d), the Eligible Executive shall be entitled to the benefits under each such subsection relating to the position held by the Eligible Executive which provides the largest amount and no benefits under such subsection relating to a position that provide for lesser amounts.

(g) For purposes of this Section 7, if an Eligible Executive’s annual target cash bonus has not yet been established for the year in which the Termination Date occurs, the Eligible Executive’s annual cash bonus for the immediately preceding year shall be used to determine the Eligible Executive’s Change in Control Severance Benefits. If no such prior year cash bonus exists with respect to the Eligible Executive, the prior year cash bonus established for a similarly situated Eligible Executive shall be used, as determined by the Committee.

The provisions of this Section are subject, without limitation, to the provisions of Sections 10, 11, 12 and 13 hereof.

(a) Non-competition Benefits . If an Eligible Executive who is either an Executive Committee Member or a Vice President is eligible for Non-competition Benefits under this Policy, the Eligible Executive shall be given the opportunity to enter into a non-competition agreement with the Company (in a form substantially the same as attached hereto as Exhibit A) upon such Eligible Executive’s termination of employment with the Company for a reason set forth under Section 5 hereof. Upon the Company’s acceptance of the Eligible Executive’s fully executed non-competition agreement, the Eligible Executive shall become entitled to receive the following amounts:

(1) Executive Committee Members . If the Eligible Executive agrees pursuant to such non-competition agreement to refrain from Competitive Activity for a period of eighteen (18) months from his or her Termination Date, the Company shall pay the Eligible Executive an amount equal to 1.5 multiplied by the sum of (i) the Eligible Executive’s Base Salary and (ii) the average cash bonus paid to the Eligible Executive with respect to the three (3) immediately preceding years, or if lesser, the number of years the executive has been employed by the Company, pursuant to the Company’s Incentive Compensation Plans. The Company shall pay such amount to the Eligible Executive in accordance with the provisions of Section 11 hereof.

(2) Vice Presidents . If the Eligible Executive agrees pursuant to such non-competition agreement to refrain from Competitive Activity for a period of twelve (12) months from his or her Termination Date, the Company shall pay the Eligible Executive an amount equal to the sum of the Eligible Executive’s Base Salary and the average cash bonus paid to the Eligible Executive with respect to the three (3) immediately preceding years, or if lesser, the number of years the executive has been employed by the Company, pursuant to the Company’s Incentive

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Compensation Plans. The Company shall pay such amount to the Eligible Executive in accordance with the provisions of Section 11 hereof.

(b) For purposes of this Section 8, if an Eligible Executive’s annual cash bonus has not yet been established for the year in which the Termination Date occurs, and no prior year cash bonus exists with respect to the Eligible Executive with respect to the three (3) immediately preceding years, the prior year cash bonus established for a similarly situated Eligible Executive shall be used, as determined by the Committee.

(a) Notwithstanding anything in this Policy to the contrary, in the event it is determined that any payments or benefits provided by the Company to or on behalf of an Eligible Executive (whether pursuant to the terms of this Policy or otherwise) (any such payments or benefits being referred to in this Section as “Payments”), but determined without taking into account any additional payments required under this Section, would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code, or any interest or penalties are incurred by the Eligible Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, collectively referred to herein as the “Excise Tax”), then the Eligible Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount so that after payment by the Eligible Executive of all federal, state and local taxes (including any interest or penalties imposed with respect thereto) and the Excise Tax imposed upon the Gross-Up Payment, the Eligible Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing, if it is determined that the Eligible Executive otherwise would be entitled to a Gross-Up Payment, but that the Payments to the Eligible Executive do not exceed 110% of the amount which is one dollar less than the smallest amount that would give rise to any Excise Tax (the “Reduced Amount”), then no Gross-Up Payment shall be made to the Eligible Executive and the Payments shall be reduced to the Reduced Amount. In such event, the reduction will occur in the following order unless the Eligible Executive elects in writing a different order (provided, however, that such election shall be subject to Company approval if made on or after the date on which the event that triggers the Payment occurs): (i) reduction of cash payments; (ii) cancellation of accelerated vesting of equity awards; and (iii) reduction of other employee benefits. If acceleration of vesting of compensation from an Eligible Executive’s equity awards is to be reduced, such acceleration of vesting shall be cancelled in the reverse order of the date of grant unless the Eligible Executive elects in writing a different order for cancellation.

(b) Subject to the provisions of Section 9(c), all determinations required to be made under this Section, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be used in arriving at such determination, shall be made by the independent registered public accounting firm engaged by the Company for general audit purposes as of the day prior to the effective date of the Change in Control (the “Accounting Firm”). In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, the Company shall appoint another nationally recognized independent registered public accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). The Accounting Firm shall provide its calculations, together with detailed supporting documentation, to the Company and the Eligible Executive within fifteen (15) calendar days after the date on which the Eligible Executive’s right to Payment is triggered (if requested at that time by the Company or the Eligible Executive) or such other time as requested by the Company or the Eligible Executive. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 9, shall be paid by the Company to the Eligible Executive within five days of the receipt of the Accounting Firm’s determination.