Subscription Businesses Face A New Legal Reality

From Autumn 2026, subscription businesses will need to operate under significantly stricter rules about how they sign customers up, remind them before renewals and let them cancel. The changes, introduced under the Digital Markets, Competition and Consumers Act 2024 (“DMCCA”), are designed to tackle what the Government sees as a structural problem: too many consumers staying subscribed, not because they actively want the service, but because they forgot, missed a renewal date, or found cancellation harder than it should be.

This is not marginal reform. The new regime places clear obligations on businesses at the three moments that matter most in a subscription lifecycle, and it does so at a time when the Competition and Markets Authority (“CMA”) has been given direct enforcement powers and the ability to impose substantial financial penalties for breaches of consumer law. For businesses that rely on recurring revenue from subscriptions, the question is not whether to comply, but how soon preparation needs to start.

Why the Government is intervening now

Subscription models have become one of the most powerful commercial tools of the modern economy. They create recurring revenue, help manage cashflow and allow businesses to build long-term customer relationships. But they also rely, to some extent, on consumer inertia. People forget what they have signed up to. They overlook the moment a free trial converts to a paid plan. And when they try to cancel, they sometimes find the process buried in account settings, designed with too many steps, or only possible through inconvenient channels.

The Government’s view is that too many consumers end up continuing by default rather than by informed choice. The policy intention behind the DMCCA is to reset that balance, ensuring that ongoing subscription payments are supported by active decisions rather than accidental retention.

What changes at sign-up

Under the new regime, businesses must give consumers clear and specific information upfront, before they enter the subscription. The consumer should not have to hunt through long terms, click through separate webpages or make assumptions about what “membership” or “subscription” means in practice.

Key information such as the price, how often payment will be taken, whether the subscription renews automatically and how cancellation works should be presented in a way that is difficult to miss and easy to understand. This matters particularly for services involving free trials, introductory pricing or annual billing cycles, where consumers are more likely to overlook what happens later.

In practice, this means businesses should be reviewing their sign-up journeys now, not waiting until the regime is in force. If key terms are currently tucked away in linked documents, or if the consumer has to scroll past several screens to find out how to cancel, this will risk non-compliance.

What changes at renewal

For many businesses, the biggest operational shift will be the requirement to send reminder notices at key points in the subscription lifecycle. These are not optional courtesies. They are intended to ensure the consumer has a timely prompt before being charged again, so they can actively decide whether to continue.

Reminder notices will matter most where free trials convert to paid subscriptions, where discounted periods end or where contracts renew annually and are easy to forget. The challenge is that reminder notices only work if the business’s systems can trigger them at the correct times, send the right content and link clearly to cancellation routes.

This is where compliance becomes a structural business issue rather than a purely legal one. Businesses using third-party billing systems, subscription management platforms or customer relationship tools may need to consider whether those systems are capable of supporting the reminder structure the regime demands and whether processes across departments are properly aligned. For businesses operating at scale, this is not something to delay until the final weeks before commencement!

What changes at cancellation

The regime is designed to ensure subscription businesses cannot retain customers simply because leaving is difficult. The expectation is not that businesses must make cancellation attractive or refrain from offering retention incentives. Rather, it is that consumers should be able to bring the subscription to an end without unreasonable obstacles, delays or confusion.

A cancellation pathway that requires phone calls, lengthy web navigation, restricted hours, or repeated steps that do not relate to ending the contract, is likely to become increasingly risky. In broad terms, the cancellation journey should not feel meaningfully harder than the sign-up journey.

Businesses should test cancellation from the consumer’s perspective and identify friction points now. Common issues include cancellation options that are only available during office hours, processes that require multiple confirmations without clear purpose and systems that present retention offers in ways that make it unclear whether the consumer has actually cancelled or simply declined an offer.

Why enforcement risk has changed

This reform matters not only because it introduces new consumer protections, but also because it sits within a tougher enforcement landscape. The DMCCA strengthens the CMA‘s powers to take enforcement action directly for breaches of consumer law, including imposing substantial financial penalties.

That changes the risk profile for subscription businesses. It is no longer simply a question of whether consumers might complain, leave negative reviews or seek refunds. Non-compliance becomes a regulatory exposure that can carry serious commercial consequences, particularly for businesses operating at scale or with large customer bases.

How to prepare

Although the regime is not expected to come into force until Autumn 2026 at the earliest, businesses should start planning early. Subscription compliance is rarely something that can be solved purely by updating terms and conditions. It requires businesses to examine how their sign-up journeys are designed, how their automated billing and customer communications are structured and how quickly and easily a consumer can bring payments to an end. Those changes often take time and sometimes require input from third-party platforms or internal product teams.

A sensible starting point is to identify which products and services operate as subscriptions in legal terms, including those that might not be labelled as such internally. The next step is to review how subscription commitments are presented to consumers at sign-up, and whether key information is genuinely being brought to their attention. Businesses should then examine whether their renewal cycles are supported by systems that can deliver compliant reminder notices at the right time, with the right content. Finally, they should test cancellation from the consumer’s perspective and remove friction that creates unnecessary risk.

For many businesses, the aim will be to ensure that the subscription model remains commercially sustainable while meeting rising consumer expectations of transparency and ease.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.