The new UK rules for automatically renewing consumer contracts
From January 2027, the UK government’s new consumer subscription contract regime under the Digital Markets, Competition and Consumers Act 2024 (DMCCA) will officially come into force.
Businesses will be required to give consumers clearer information about subscriptions, preventing so-called ‘subscription traps’. The new rules were expected to come into force in Spring 2027, but the government has now announced it will bring forward implementation as part of a new focus on “everyday fixes on the cost of living”.
In this article, we cover key points businesses need to know, including cooling-off periods, pre-contract information requirements, renewal reminder duties and the importance of reviewing contract wording and cancellation processes.
Key points to know about the new subscription contract rules
- Businesses will have to give clearer information up-front about subscription terms which must be presented separately from the full pre-contract information
- Consumers must receive reminders before their subscriptions renew, including information about the renewal date, payment due and cancellation process
- Businesses must offer a straightforward process to exit contracts. Notably, if a contract was started online it must be possible to end it online.
- There will be a new 14-day cooling-off period allowing consumers to cancel a subscription without penalty after a free or discounted trial or when renewing a contract for more than 12 months
- If a business does not provide the required pre-contract information, give renewal reminders or offer easy contract termination, consumers may have the right to cancel and be refunded
- Businesses can also be fined if they breach the terms of the new regime
Who do the new subscription contract rules apply to?
The new rules will generally apply to contracts related to goods, services and digital content featuring ongoing renewals that create an automatic obligation for further payment.
Businesses will have to comply with the rules if they do business with UK consumers even if the business is based abroad.
Some sectors and contract types will be exempt. This includes certain financial service and insurance providers, utility companies, private healthcare and education providers, residential rental contracts and gambling operators.
What are the cooling-off period requirements?
Currently, consumers typically have a 14-day cooling-off period after signing a contract in which they can cancel with no penalty.
The new regime introduces a second cooling-off period for when an initial free or discounted trial ends and when a contract is renewed for more than 12 months.
What pre-contract information do businesses need to give?
The new regime sets out exactly what information must be provided immediately before a customer enters into the contract. This includes details such as payment frequency, minimum contract terms, cancellation rights and how renewals work (including renewal reminders).
This information must be given to the customer separately from the rest of the pre-contract information and the business’s terms and conditions.
What are the new requirements for subscription renewal reminders?
Businesses will now have a legal duty to remind subscribers when they are due for renewal. These reminders must be given early enough that the customer has time to cancel. They must set out the renewal date, payment due and how to cancel if they wish to do so.
What do businesses need to do to get ready?
Any business offering subscriptions to UK consumers will need to determine:
- Are their contracts covered by the scope of the new regime?
- If so, do their existing contracts and processes comply with the new requirements?
Every stage of the customer journey should be examined. This includes information provided at sign-up, renewal reminder wording, systems for renewal reminders, and cancellation and refund processes. All contracts and terms and conditions should be examined for compliance and consistency.
Employees should be trained on the new requirements to make sure they give customers the correct information. Any relevant scripts or other staff resources should also be updated.
If you are using AI systems, such as chatbots, to support consumers, it is important to make sure they are only providing the correct information.
How Longmores can help with subscription contract compliance
At Longmores, we regularly advise clients on all aspects of contract law. We can review your existing contracts and terms and conditions to identify any compliance gaps. Where required, we can amend your existing contracts and terms, or draft new versions to ensure compliance with the new rules.
For advice on compliance with the new subscription contract rules or any other aspect of contract law, please contact us and we will be happy to advise.
Please note, the contents of this article are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.
