New rules to protect consumers from ‘subscription traps’ due next year

Consumers are to be better protected from “subscription traps” in a move that will save them a collective £400 million a year, the government has announced.

New rules, expected to come into force early next year, will ensure consumers receive reminders before free or discounted trials end or contracts of 12 months or more automatically renew.

Consumers will have to be allowed to cancel easily online if that is where they originally signed up, ending lengthy waits on hard-to-find phone numbers.

They will also have the protection of a new 14-day cooling off period after a free or discounted trial ends, or when a contract renews for 12 months or longer.

However, certain memberships of charitable, cultural and heritage organisations will be exempt from the new rules due to their role in preserving and providing access to locations and cultural collections.

Minister for consumer protection Kate Dearden said: “There’s nothing more frustrating than seeing money you’ve worked hard for, disappear from your account for a subscription you’ve forgotten you had.

“These new rules will put consumers back in control of their money – making subscriptions clearer, fairer and far easier to cancel.”

There are 155 million active subscriptions held by consumer across the UK, with almost 10 million of them believed to be unwanted.

More than 3.5 million people are being “quietly rolled” from free or discounted trials into fully costed contracts, while another 1.3 million are caught out by unexpected autorenewals, the Government said.

By making it easier to cancel unwanted services, consumers could save around £14 every month on average per unwanted subscription, or almost £170 a year, it added.

Which? head of consumer rights policy Sue Davies said: “Subscription traps can be costly and wreak havoc on finances that are already under strain from the cost-of-living crisis.

“The strengthening of subscription laws will be welcome news for those struggling with rising costs.

“These new rules will help put consumers in the driving seat with proper transparency and protection.”

Lord Richard Walker, the Government’s “cost-of-living champion”, said: “At a time when every pound matters, these new rules will give consumers the clarity and control they deserve.

“By stopping companies from quietly rolling people onto costly contracts and making cancellations far simpler, households can stay on top of their budgets and keep more of their money where it belongs: in their own pockets.”

Speaking to Times Radio on Thursday morning, business minister Ms Dearden said the Government’s new rules will give consumers “more control of their hard-earned cash”, which she argued is especially important during a cost-of-living crisis.

The minister later told Sky News the rules are designed to make it “as easy to leave a subscription as it was to join”.

The changes are being introduced next year to gives businesses time to prepare, Ms Dearden told BBC Breakfast, adding that the Government is working with firms on guidance to “make sure they can comply as much as possible”.

If businesses do not abide by the rules, consumers will be due a refund and the company could be fined.

Speaking to GB News, the minister said: “If we do find that businesses aren’t abiding by these rules and aren’t acting in good faith, there will be consequences.

“Whether for consumers, they can get that refund, or we’re looking to the CMA and trading standards that they can impose up to 10% of global turnover in terms of fines.”

In these ways, the Government is “cracking down on unwanted subscriptions”, she said.