Background
The Digital Markets, Competition and Consumers Act 2024 ("DMCCA") creates a new regime designed to give consumers greater protection against so-called "subscription traps", where consumers are misled into signing up to a subscription through a free trial or discounted introductory offer and then find it difficult to leave.
The Government has confirmed that the regime will come into force in January 2027, having previously been expected in Spring 2027. The accelerated timetable gives businesses less time than expected to prepare.
Although secondary legislation and detailed guidance are still awaited, the direction of travel is clear, and preparations should gear towards January 2027 being the deadline for compliance. Backed by the CMA's direct enforcement powers (which they've been actively invoking), now is the time to ensure your business is prepared for the new restrictions.
Why this matters: The CMA's enforcement powers
The DMCCA empowers the Competition and Markets Authority ("CMA") to directly enforce consumer protection law, using civil sanctions and without needing to go to court. With these powers, the CMA have the ability to fine businesses up to 10% of their annual global turnover for breaches. The CMA's own account of its first eighteen months under this regime shows it is using those powers actively, not holding them in reserve.
Since April 2026 until the time of writing, the CMA has opened six new investigations, taking the total number of consumer protection cases it has opened under the regime to 20, has settled seven cases, and has ordered redress of over £2.3 million and fines of over £11.8 million.
Notwithstanding the fact that the government is still yet to publish secondary legislation and further guidance, the CMA has confirmed that the subscription contracts regime will be a priority area once it comes into force. Whilst the CMA has also said that in the early months of the regime its focus will be on supporting businesses to get compliance right, it has been explicit that this support should not be read as a delay to enforcement: conduct during this early period may still be taken into account in later enforcement action, and the CMA will focus its enforcement on the most egregious conduct, particularly where businesses should already be clear about their obligations under existing consumer law.
The CMA's wider enforcement record under the DMCCA, including recent investigations into well-known consumer-facing businesses over pricing practices, misleading reviews and subscription-related conduct, illustrates the kind of scrutiny and financial exposure that non-compliant subscription practices could attract once the new regime takes effect.
What are the new rules on subscription contracts?
The incoming rules apply to most business-to-consumer subscription contracts involving the supply of goods, services or digital content in exchange for recurring payment, including contracts that start with a free trial or discounted introductory offer which automatically converts into a paid subscription unless the consumer cancels.
Typical examples include streaming services, membership programmes, software subscriptions and recurring product deliveries. There are some narrow exemptions which have been carved out, including certain financial services, utilities, healthcare services, telecommunications services regulated by Ofcom, residential tenancies and package holidays. The Government has also recently confirmed that certain charitable memberships for cultural and heritage organisations will be excluded from the regime, although the legislation implementing that exemption has not yet been published.
Within scope, the regime introduces four main protections for consumers centring on the provision of pre-contract information, renewal reminders with sufficient information on the renewal terms, mandatory 14-day cooling off periods within which a consumer can cancel without penalty, and ease of exit arrangements. For more information on the substantive requirements, please visit this Insight page: Subscription contracts: Preparing for change in 2026 | DWF.
What can be done to prepare?
Businesses should review their existing offerings now to establish whether any contracts fall within scope of the regime.
Where subscriptions are in scope:
- Conduct a gap analysis against the incoming regime's requirements, to identify where current processes fall short of the new requirements and what solutions, could close the gaps.
- Review the customer sign-up journeys and pre-contract disclosures, including checkout wording and payment acknowledgements.
- Test cancellation and exit routes end to end, including the online cancellation route where sign-up is online.
- Confirm whether internal systems are equipped to generate the required renewal reminders and notices.
- Review cooling-off, refund and customer service procedures against the new statutory timeframes.
- Keep the planned compliance programme under review as secondary legislation and statutory guidance are published
Next steps
Although the detail of the restrictions may be subject to the content of the expected secondary legislation and statutory guidance, with at most under four months to prepare, businesses should use the (now shortened) timetable until the new rules come into force to ensure their subscription offerings are fully aligned with the anticipated new requirements.
For more information on how the DMCCA could affect your business, and for tailored advice on how to achieve compliance, please get in touch.
We would like to thank Alicia Barret for her contribution to this article.
