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While the government’s response has been published, secondary legislation and guidance have not yet been released. This leaves you without all the information required to align your subscription products fully with the new rules.
Despite this, the aim is clear: consumers should have better visibility and control over their subscriptions. Contracts must be easier to understand and exit.
Key changes for your business
Provision of key pre-contract details
Before a consumer signs up to a subscription, you must provide clear, upfront information about the contract. This includes costs, payment schedules, and renewal dates. This information must be clearly presented and easily accessible. It must not be buried within lengthy terms and conditions.
Reminders
During the subscription term, you must send reminder notices before key dates. These include the end of a free trial or a concessionary period, every six months, and prior to renewal of contracts lasting twelve months or more.
Termination
Exiting a subscription contract must be straightforward. If a consumer signs up online, they must be able to cancel online. You may offer incentives to stay or request feedback. However, cancellation cannot be complicated or time-consuming.
Terms limiting when cancellation can occur or requiring payment before renewal will not be permitted. You must confirm termination within 24 hours for online cancellations.
Cooling-off periods and refunds
The new rules introduce additional 14-day cooling-off periods:
- after a free trial or introductory period ends; and
- where a contract is due to renew for a period of 12 months or more.
You must notify consumers of their cooling-off rights on the date of auto-renewal. This notification must be clear and separate from your standard terms.
Where cooling-off rights are exercised, refunds may be due. For services that have already started, refunds will be proportionate. If they have not started, a full refund is required. Digital content will continue to follow a similar model. Consumers can waive their initial cooling-off period right if they request immediate access. However, after renewal, they will benefit from the new 14-day cancellation right with a proportionate refund.
For goods, you can reduce refunds where items cannot be returned or resold. Examples include perishable, bespoke, or unsealed items for hygiene reasons.
If you fail to inform consumers of their cooling-off right, the cancellation period can extend by up to 12 months.
Risks of non-compliance
Beyond reputational risks, non-compliance carries significant financial consequences. The Competition and Markets Authority (CMA) will have direct enforcement powers. It can impose fines of up to 10% of a company’s global turnover. The CMA is already sending a strong message to businesses with its “drip-pricing” investigations. We anticipate it will not hold back when the new rules are in force.
Looking ahead: preparing for compliance
Finer details will be set out in secondary legislation and guidance. These will clarify technical areas, including how rules apply to “mixed” contracts – for example, where, under your subscription model, you offer goods and services, goods and digital content or services and digital content.
These changes are due in January 2027. If you prepare early, you will be better placed to adapt and avoid regulatory risk. We recommend taking the following steps now:
- Review cancellation processes to ensure they are simple, accessible, and compliant.
- Ensure internal systems can track key dates for reminders and renewals.
- Review consumer agreements to ensure key information is clearly displayed.
- Check whether pre-contract information meets the new transparency standards.
For support reviewing your subscription model or preparing for these changes, please contact our commercial business lawyers by email or call +44(0)3333 231580.
