UK Digital Markets, Competition and Consumers Act subscription contracts regime to take shape by 2027

The UK government has published its response to the consultation it launched in November 2024 on implementing the new subscription contracts regime under the Digital Markets, Competition and Consumers Act 2024 (DMCCA). While the unfair commercial practices provisions under the DMCCA have been effective since April 2025, the subscription contracts regime will not come into effect until spring 2027.

The consultation response provides further detail on how the new regime will work, though questions still remain. 

Cooling-off rights and refunds 

Under the new regime, consumers entering a subscription contract for services, goods or digital content, will retain the existing 14-day "initial cooling-off" period, which was previously set out in the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (CCRs) but is now replaced by the DMCCA and will also be granted a new 14-day "renewal" cooling-off period.

This will commence after a trial period or a contract of 12-months or more renews automatically. Consumers who forget to cancel before the auto-renewal date, will have more time to withdraw from the contract and receive a refund. The government's response addresses three categories of contract.

Digital content

The existing waiver of cooling-off rights during the initial cooling-off period under the CCRs, which is effective as soon as supply starts, will continue to apply. For the renewal cooling-off period, consumers will be able to cancel during the 14-day window and receive a proportionate refund based on the total subscription contract price.

The government rejected concerns about "binge and cancel" behaviour after a trial period or a contract of 12 months or more auto-renews, concluding that the risk is not substantial.

Services refunds

The government considered respondent arguments that refunds for services, where supply has commenced but the contract is then cancelled, should be based on the level of consumption, rather than, as the current system provides, the amount of time the contract has been in place, the government decided that there is not sufficient reason to make any changes.

Consumers will therefore receive a proportionate refund, ensuring that payment matches the services consumed.. However, where a contract is cancelled during either cooling-off period before any service has been supplied, consumers will be entitled to a full refund. 

Returnable goods

Where a contract for returnable goods such as a book is cancelled during either cooling-off period, the consumer will, in most circumstances, receive a full refund, including standard delivery costs, if they return the goods. Guidance will clarify how refunds of delivery fees for returnable goods will work in practice, including where goods are over-handled or not returned.

For perishable and bespoke goods, the government will not require suppliers to establish a "dispatch date" after which, if the consumer cancels, the cost of the goods would be deducted from the refund. Instead, the legislation will refer simply to "supply". The consumer will receive a full refund if they cancel before supply, but if they cancel after supply, the refund may be reduced by the value of the goods (including all delivery costs).

Refunds for trader breaches

The DMCCA gives consumers the right to cancel their contract where the trader breaches certain duties that are implied into the contract, such as failing to provide key pre-contract information, send a reminder notice or provide an "easy exit".

The government has decided to stick with its proposals in the consultation. Consumers will be entitled to a refund of all payments from the date on which the breach becomes operative (to be defined in regulations) until cancellation, subject to certain safeguards to protect the trader. In response to concerns about consumer protection, the government will, however, also include in the legislation a list of acts or omissions that constitute breaches of the implied terms for which the consumer will be entitled to an automatic refund (of at least one renewal payment made) without needing to prove financial loss.

Exiting a contract

Under the DMCCA, consumers must be able to exit their contracts easily and if they sign up online, they must be able to exit online. Some respondents raised questions, for example, on what counts as an online exit and what constitutes a reasonable number of offers to consumers wishing to leave. Guidance will aim to clarify these points, but the government did confirm that a trader merely providing its email address is "unlikely" to count as an online exit and that cancelling a consumer's direct debit with a bank is "not an online exit mechanism". It also said that there is no strict legal requirement for the online entry and exit mechanisms to be identical. For example, a consumer will be able to sign up through the trader's website and exit through the app.

The government's aim is also to ensure that consumers can exit an auto-renewal contract at any time and is proceeding with its original proposal to prevent traders from including contractual terms that make it difficult. The legislation will also ensure that traders cannot make consumers liable for payment before a rolling contract actually renews.

Notices

The government confirmed that it will be implementing most of the consultation proposals on reminder, cooling-off and end of contract notices. Reminder and cooling-off notices will therefore have to be provided in writing on a durable medium, with their purpose immediately apparent to the consumer. Guidance will further clarify the meaning of "durable medium", although the government did confirm that while email, SMS and WhatsApp will qualify, a fleeting in-app notification that cannot be retained and revisited will not.

While the purpose of an end-of-contract notice must also be immediately apparent to the consumer, the government will no longer require that information to appear as the first thing consumers see in either end-of-contract or reminder notices. It considers that the existing requirement for such information to be more prominent than any other information provided at the same time achieves the same objective.

Osborne Clarke comment

The consultation response provides welcome clarity on the direction of travel, but questions remain. The government will bring forward the necessary secondary legislation when parliamentary time allows, with a target of spring 2027 for implementation. Guidance is also due to follow and should provide further clarification, including on the application of the regime to mixed contracts (such as bundled telecoms and streaming services) and the presentation of pre-contractual information.

However, given the substantial changes that the new regime will bring, possibly requiring significant operational adjustments, it is worth businesses keeping a close eye on developments and considering reviewing their practices and preparing for the changes now.