Automatic renewal clauses are widely used in subscription agreements, memberships and recurring service contracts. They allow a contract to continue automatically for a further period unless the customer gives notice to cancel.

For businesses, this can provide continuity and reduce administration. However, customers need to understand clearly when a contract will renew, what they will pay and how they can cancel.

This is becoming increasingly important with the introduction of new subscription rules under the Digital Markets, Competition and Consumers Act 2024 (DMCC). The DMCC sets out a range of rules and regulations affecting consumer protection, competition and digital markets, including a new regime governing certain consumer subscription contracts.

The new subscription regime will be particularly relevant to businesses offering memberships and subscription services to consumers, whether those subscriptions are offered online or in-store.

This might include:

· Gyms and leisure centres;

· Companies offering “subscription boxes”;

· Shops that offer membership schemes;

· Apps, websites and streaming platforms; and

· Businesses offering recurring consumer services that automatically renew or move from a free or discounted introductory period to a higher recurring payment.

New subscription rules coming sooner than expected

On 9 August 2026, the Government announced that the DMCC’s new subscription contracts regime is expected to come into force in January 2027, bringing forward the previously indicated Spring 2027 timetable.

The regime is intended to tackle so-called “subscription traps” and will apply to certain consumer subscription contracts, including arrangements that automatically renew or that move from a free or discounted introductory period to a higher recurring payment.

The new rules will introduce greater requirements around:

· Pre-contract information: Consumers must be given key information about the subscription, including payment amounts, renewal arrangements and cancellation rights.

· Renewal reminders: Businesses will need to remind customers about upcoming renewal payments at prescribed times and, in certain circumstances, remind customers about the continuing nature of their subscription.

· Cancellation: Businesses must provide an accessible and straightforward way for consumers to end their subscriptions. Where a subscription was entered into online, consumers will need to be able to exit the contract online.

· Cooling-off rights: Consumers will have an initial 14-day cooling-off period and, in specified circumstances, a further 14-day cooling-off period following renewal, including in relation to certain subscriptions following a free or discounted period or certain longer-term renewals.

The rules will require businesses to look beyond the wording of their contracts. The entire customer journey, including websites, payment systems, renewal communications and cancellation processes, may need to be reviewed.

What does this mean for automatic renewal clauses?

Businesses using automatic renewal clauses for consumer subscriptions and memberships should consider whether customers can easily understand:

· When their contract will renew;

· How much they will pay;

· How long the renewed contract will last; and

· How they can cancel.

For contracts within the scope of the new regime, relevant information will need to be provided clearly and at the appropriate stage. Businesses should not assume that including an automatic renewal provision somewhere in lengthy terms and conditions will, by itself, be sufficient.

Cancellation processes should also be straightforward and should not involve unnecessary obstacles. Businesses should consider whether the contractual cancellation provisions work effectively in practice across their websites, apps, customer service processes and payment systems.

Pricing practices also under review

The Government has also announced a consultation on whether certain misleading pricing practices should be added to the DMCC’s list of prohibited commercial practices.

This includes practices such as misleading “was/now” pricing, invented discounts and misleading recommended retail prices (RRPs).

These proposals are not yet law. However, businesses which use introductory offers, time-limited discounts or reference pricing should ensure that their claims are genuine and can be substantiated.

Berry Smith’s Bottom Line

With the new subscription regime expected to come into force in January 2027, businesses offering consumer subscriptions and memberships should start preparing now.

Businesses should look to:

· Review their automatic renewal clauses and consumer terms;

· Check that pricing, renewal and cancellation information is clearly communicated;

· Review their renewal reminder processes;

· Test the customer cancellation journey;

· Ensure systems can accommodate the new cooling-off and notification requirements; and

· Review promotional and discount claims to ensure they can be substantiated.

The new rules are a reminder that automatic renewal clauses should not be considered in isolation. Businesses need to ensure that their contracts, customer communications and systems work together to provide a transparent and straightforward subscription journey.

Need help reviewing your subscription or membership contracts? Berry Smith advises a wide range of businesses on commercial and contract matters, including drafting, reviewing and negotiating commercial agreements and terms and conditions.

Contact us: commercial@berrysmith.com