Two months until the new UK consumer subscription contract regime: new regulations and guidance published

The new UK consumer subscription contract regime

The Government has confirmed that the new subscription contracts regime under Part 4, Chapter 2 of the Digital Markets, Competition and Consumers Act 2024 (“DMCC”) will commence in January 2027. The regime will be supplemented by the Consumer Subscription (Cancellation and Information) Regulations 2026 (the “Regulations”) which have been laid before Parliament in draft form with accompanying Government guidance (linked here: Draft Guidance on Consumer Subscription Contracts) (the “Guidance”).

The new regime will commence on 1 January 2027, subject to Parliamentary approval of the Regulations (but further changes are not expected). The timetable is now very tight for businesses to ensure compliance before the new rules apply.

Who is affected?

The new regime applies to subscription contracts between a trader and a consumer entered into from 1 January 2027. Whilst it does not apply to contracts entered into before this date, the Guidance indicates in its FAQs that best practice will be for traders to provide equal protection to existing contracts entered into before 1 January 2027 where such contracts automatically renews onto a new term.

Certain contracts will be excluded from the new regime, including (but not limited to) financial products, utilities, medical prescriptions and products, telecommunications, accommodation and child care contracts. However, businesses will need to carefully consider their contracting arrangements where other goods, services and digital content are also provided as a bundle alongside excluded products, as the legislation could still apply.

There is potential international reach under the DMCC, as it applies to all subscription contracts with UK consumers and may apply to UK traders selling outside of the UK.

Key changes under the new regime

Whilst non-exhaustive, here is a quick reminder of the new duties of traders entering into subscription contracts with consumers:

• Pre-contract information: additional key pre-contract information (such as price, payment frequency, renewal terms, the existence of any trial and how to cancel) must be presented prominently and separately before the consumer commits.

• Reminder notices to be sent generally at 6 monthly or 12 monthly intervals.

• Cooling-off rights: Consumers are entitled to a cooling-off period of 14 days from entry into the contract. They are also entitled to a further cooling-off period following the end of a free or discounted trial and renewal of contracts with a term of 12 months or more. Cooling-off notices are required in addition to the reminder notices above.

• Cancellation and exit: Traders must enable consumers to end the contract in a straightforward, cost-effective and timely way (i.e. in a single communication and without unnecessary steps).

What is covered by the draft Regulations and new guidance

The Regulations and Guidance published offer businesses with greater clarity and specific nuances as to how they can comply with the new subscription contracts from January, particularly where the rules were previously unclear. Clarifications include:

• an exemption for cultural and heritage charitable membership contracts;

• an exemption for micro-grocery businesses;

• rules on the cooling off period and refunds for perishable goods, bespoke goods and hired goods;

• rules on cancellation and refunds for digital content; and

• rules on cancellation and refunds for mixed contracts (i.e. contracts for a combination of goods, services and digital contract).

Enforcement

As with the other consumer law changes under the DMCC, compliance is paramount due to the CMA’s new direct enforcement powers, which include an ability to impose fines of up to £300,000 or 10% of global turnover for consumer law breaches.

In addition, failure to provide a consumer with information about their initial cooling-off rights as required by the DMCC is a criminal offence which may be liable to a fine.

What can you do now

Whilst the Regulations are still subject to Parliamentary approval, given the short period until the implementation of the changes, it is important to ensure that all affected businesses:

1. Identify all subscription contracts that you enter into with consumers, whether these are for goods, services or digital content. Do these renew automatically and how often do these subscription contracts renew? Consider if the new rules will apply or if any exemption applies;

2. That you are familiar with the new requirements set out in the DMCC, the Regulations and the Guidance where your contracts are in scope;

3. That appropriate business teams are engaged. The new regime will require changes to your webpages, checkout process and standard consumer communications, such as notices and confirmation emails. Which teams are responsible for these functions, what information may you require from them to carry out a gap analysis of compliance, and are these teams aware of the expected deadlines to implement changes?

4. Consider what adjustments or additions to your operational processes would be required (for example, reminder notices may not currently be sent to consumers at all).

5. Review of consumer terms and conditions to ensure compliance with the pre-contractual information requirements and include details of additional cooling off periods.

6. Ensure that consumer-facing teams are aware of the changes and what new rights consumers will have to ensure consumers are not misled about their rights when contacting you.

How can we help

Our dedicated Consumer Law and Competition, Trade & Foreign Investment teams, who have extensive experience of dealing with the CMA and cross-sector regulatory investigations, are well placed to support businesses by providing coordinated consumer law advice alongside practical enforcement experience. Please reach out to a member of the team if you would like to discuss what the banned practices means for your business and how to implement appropriate measures.

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