Katrina Anderson, consumer lawyer and partner at Mills & Reeve

Businesses that make it difficult for customers to understand, manage or cancel their subscriptions could face greater regulatory scrutiny from 2027, as new rules place tougher obligations on how subscription contracts are sold and managed.

Government guidance published on 19th October sets out how businesses must comply with the Digital Markets, Competition and Consumers Act 2024 (DMCC Act) and the Consumer Subscription Contracts (Cancellation and Information) Regulations 2026. The rules will apply to subscription contracts entered into from 1 January 2027, giving businesses a limited window to review their existing arrangements and address any gaps before the requirements take effect.

There are several key actions businesses can take now to avoid getting caught out.

Tackling subscription traps

The changes are designed to tackle subscription traps, where consumers can find themselves paying for subscriptions they no longer want, struggle to understand when free trials become paid subscriptions, or face unnecessary obstacles when trying to cancel.

Under the new requirements, businesses will have to provide clear information about key terms before a customer signs up, including how much they will pay, when payments will be taken and how the subscription will renew. This information must be presented prominently and in plain language, rather than buried within lengthy terms and conditions.

Businesses will also have to send reminders at key points during a subscription. These include before a free or discounted trial converts into a paid subscription, roughly every six months for rolling weekly or monthly subscriptions, and ahead of certain longer-term renewals.

The emphasis on clear information is significant. Consumers must be able to understand the financial commitment they are making before they sign up, rather than discovering unexpected charges or renewal terms further down the line. Businesses should review how this information is presented across their websites and sales channels to ensure it is prominent, accessible and easy to understand.

Making cancellation straightforward

The cancellation requirements are another significant part of the changes. Where customers can sign up online, they must be able to end their subscription online too, through a straightforward process with clear instructions and an accessible exit route. Businesses cannot introduce unnecessary steps or obstacles that make it harder for customers to leave.

Consumers will also benefit from a 14-day initial cooling-off period, alongside further cancellation rights following certain renewals, including when a free or discounted period ends or a subscription automatically renews for 12 months or longer.

Businesses should be reviewing their subscription journeys now rather than waiting until the new requirements take effect. This means looking at the information presented at the point of sign-up, how payment and renewal reminders are issued, and whether customers can cancel without having to contact multiple departments or explain their decision.

Subscription models rely on customer retention, but making it difficult for customers to leave risks undermining trust and generating complaints as well as risking regulatory investigation and fines. Businesses should be retaining customers through the value of their offering, not relying on processes that make cancellation harder. The reputational cost of getting this wrong could extend beyond the individual subscription.

Wider CMA scrutiny of sales practices

The new subscription guidance comes against the backdrop of wider CMA enforcement action targeting misleading sales practices. The regulator recently announced £6 million in fines against three businesses following investigations into practices including misleading time-limited offers, automatically adding paid-for extras to purchases and failing to display mandatory charges clearly.

The action should be seen as a warning that the regulator is prepared to act where businesses fall short of existing consumer protection standards. The introduction of further subscription requirements adds another area where businesses will need to demonstrate that their practices are fair and transparent.

What businesses should do now

The underlying message for businesses is clear: consumers must be able to understand what they are buying, what they will pay and the commitments they are making. Failing to provide that clarity risks both regulatory action and damage to customer relationships.

The CMA now has powers under the DMCC Act to impose significant financial penalties for breaches of consumer protection law, making compliance with these obligations a board-level consideration rather than simply a matter for legal teams.

Businesses should establish what needs to be changed to ensure compliance. This will mean areview of their subscription terms, sign-up processes, any existing renewal communications and cancellation arrangements. They should also consider whether their wider pricing, promotional and sales practices meet existing consumer protection standards.

With the new rules taking effect in January 2027, businesses have an opportunity to identify and address potential problems before they become a compliance issue. Waiting until the requirements come into force, or until the CMA raises concerns, could prove considerably more costly.