New rules for Netflix, gym memberships, and other UK subscriptions from January
The UK’s new consumer subscription regime is due to take effect on 1 January 2027, ushering in several new rules that businesses will have to follow when it comes to memberships and subscription arrangements.
The changes go far beyond updating terms and conditions, as businesses may need to modify sign-up journeys, apps, billing and CRM systems, customer communications, cancellation processes, refund arrangements and record-keeping. This is according to Sarah O’Brien and Marta Isabel Garcia, Partners at legal firm Stephenson Harwood.
The firm notes that the changes apply broadly where a consumer pays for goods, services or digital content supplied on a recurring or continuing basis and the contract renews or continues unless the consumer takes steps to end it.
It also covers free or discounted introductory offers that automatically convert into paid or higher-priced subscriptions. This includes:
- Streaming, software and digital-content subscriptions;
- Gym, wellness and other recurring memberships;
- ‘Subscribe and save’ arrangements;
- Recurring product deliveries;
- Free or discounted trials that convert automatically into paid subscriptions.
The rules can also apply where a subscription is ancillary to a business’s main offering, such as a recurring servicing or delivery arrangement.
They are not limited to businesses operating principally through subscription models, Stephenson Harwood said.
What the changes mean
Before a consumer subscribes, the business must provide prescribed key pre-contract information clearly and prominently. This includes:
- Whether the contract will renew or continue automatically;
- The frequency and amount of payments;
- The minimum total amount the consumer may have to pay;
- Any minimum commitment or notice period;
- How and when the consumer can end the contract; and
- Relevant cooling-off rights.
“The guidance provides practical detail on presentation. For online sales, the key information should be displayed together and brought clearly to the consumer’s attention before they subscribe. It should not be buried in terms and conditions or hidden behind an inadequately labelled link,” Stephenson Harwood said.
“For telephone sales, the information must be explained clearly. For in-person sales, it must be provided legibly and in writing.”
Businesses must also provide or make available the wider full pre-contract information, including details about the product, trader, payment and delivery arrangements, complaints and statutory rights.
Businesses must also send clear reminders before consumers become liable for certain renewal payments.
Depending on the subscription, reminders may be required:
- Before a free or discounted period converts into a paid or full-price subscription;
- During each relevant six-month period for rolling subscriptions; and
- Before renewal for a period of 12 months or more, with an additional earlier reminder.
The notice must give the consumer sufficient time to understand the upcoming payment and, if they choose, cancel before becoming liable. It must identify the payment amount and date and explain how to end the contract.
Reminder notices must be given on a durable medium, such as email, paper or SMS. A disappearing push notification would not generally be sufficient. Marketing material may be included, but must not overshadow the prescribed information.
Each subscription model should be mapped against the applicable reminder timetable, and CRM and billing systems must be able to generate, deliver and retain evidence of the required notices.
Cancellations
Consumers must be able to end a subscription without unnecessary steps or repeated contact with the business.
“Where a consumer subscribes online, an online cancellation route must also be available. The guidance indicates that cancellation should be offered through the same online medium used to subscribe. If a consumer subscribes through an app, for example, the cancellation route should also be available within the app,” Stephenson Harwood said.
The firm noted that a particular “cancel” button is not mandatory and a clear webform may be sufficient, but simply providing an email address will not generally meet the requirement.
Businesses may ask for feedback or present retention offers, but these must be optional and must not obstruct or delay cancellation.
Once a subscription ends, the business must also provide written confirmation on a durable medium. The operational process must therefore stop future billing and trigger the appropriate end-of-contract notice.
“The practical implication is that businesses should test cancellation routes end-to-end across websites, apps and customer-service channels, including whether a submitted cancellation is correctly recorded and stops the relevant payments,” the firm said.
