New consumer subscription contract rules: prepare for compliance
Subscriptions are an integral part of consumers’ everyday lives, from streaming music and films to repeat purchases of meals and everyday essentials. According to the government’s consultation on the implementation of a new subscription contracts regime (published in November 2024), there were approximately 155 million active subscriptions in non-regulated sectors in the UK, representing customer spend of approximately £26 billion per year.
While the use of subscription-based business models is increasing, the government has raised concerns that the current rules can lead to consumers becoming trapped in subscriptions which they no longer want.
Accordingly, new rules for some subscription contracts are due to come into force in Autumn 2026. The framework for this is due to be incorporated in the Digital Markets, Competition and Consumers Act 2024 (“DMCCA”) with secondary legislation expected to set out how it will work in practice.
While the detail of the new rules is yet to be finalised, businesses which offer goods, services or digital content by way of a subscription contract should prepare now to take the necessary steps to ensure readiness to comply once they come into force.
Exceptions under the Digital Markets, Competition and Consumers Act 2024
There will be some exceptions to the new rules, including for regulated utilities and banking services. There will also be an exception for everyday consumables delivered to the home or workplace but only in relation to micro-entities and unincorporated bodies. Accordingly, it is likely that some bigger food and drink suppliers will come within the scope of the DMCCA rules despite being excluded from the scope of the current Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013/3134.
Anticipated changes under the new subscription contracts regime
We have identified the four key changes expected in the forthcoming legislation along with the consequences of non-compliance:
- Additional requirements in pre-contract information
Businesses will already be familiar with the need to provide pre-contract information to consumers but the main additional obligation under the new rules is to give consumers certain key pre-contract information.
Businesses should familiarise themselves with these now and consider how this can be integrated into their current processes.
- Reminder notices
Businesses will need to ensure customers receive reminder notices before the expiry of any introductory period as well as reminder notices either every six months (for weekly or monthly contracts) or, where renewal payments are made less frequently, before each renewal payment becomes due.
These reminder notices will need to contain specified information, be reasonably prominent and be provided to the consumer at the correct time, depending on the subscription contract.
Businesses should review their existing processes and consider any changes necessary to ensure compliance.
- Cooling-off notices
Business will already be familiar with consumers’ right to cancel contracts within 14 days on entering into a contract. The new rules will require consumers to be given a cooling-off notice on the first day of the renewal cooling-off period, separate from the provision of any other information.
- Termination or cancellation
Businesses will need to ensure there is a straightforward process in place for consumers to terminate or cancel their subscription contract. This must provide for them to easily cancel the contract at any time and in a way where they do not have to take any steps which are not reasonably necessary. If a consumer entered into the subscription online, they must be able to terminate online with instructions to do so also displayed online.
In addition, there will be controls on the use of last-minute offers designed to retain customers going through the cancellation process.
Consumers will also be free to cancel by providing a clear statement to a business of their wish to do so, even if this does not follow the cancellation process set up. Businesses will therefore need to ensure this process is easy for consumers to navigate, to reduce the likelihood and occurrence of consumers cancelling by a different method, which is more likely to be missed by the business.
Businesses must give consumers who cancel their contract a notice acknowledging this within 24 hours for online cancellation or 3 working days if cancelled by other means.
Consequences for non-compliance under the Digital Markets, Competition and Consumers Act 2024
The DMCCA introduces a new direct enforcement regime for the Competition and Markets Authority (CMA) in respect of infringements of specific consumer protection laws, and this includes the subscription rules in the DMCCA.
The CMA’s fining powers in the event of non-compliance are wide and businesses can expect action to be more severe than in the past. The precise details as to how the CMA will treat breaches of the subscription contract rules is expected to be covered by guidance when the rules come into force.
In line with other specific areas of consumer law, the CMA will likely target those businesses which offer subscription contracts and investigate potential breaches by issuing Information Notices. Businesses which fail to properly respond and/or are found to have breached the law could face fines of up to 10 per cent of global annual turnover.
How Hamlins can help
Businesses which offer goods, services or digital content by way of a subscription should take action now to ensure they are prepared and will be ready to comply with the new rules when then come into force to avoid any sanctions.
Our expertise includes advising clients on their regulatory and enforcement concerns, advertising and marketing compliance, reviewing and drafting standard terms and conditions and assisting with practices, procedures and policy documents.
With increasing regulatory scrutiny and evolving consumer protection laws, it is essential for businesses to have a trusted legal partner who can navigate these complexities and safeguard their best interests. If you would like to discuss the new rules for subscription contracts anticipated under the DMCCA and how your business might be affected, please get in touch.