If your software, app or platform is sold to consumers on a recurring subscription, the way you sign people up, renew them and let them leave is about to be regulated in detail.
New subscription rules under the Digital Markets, Competition and Consumers Act 2024 (DMCCA) are due to apply to consumer subscriptions entered into on or after 1 January 2027. That is now only weeks away, and there is no grace period. Free trials that roll into paid plans, auto-renewing annual licences and “cancel by phone only” journeys are all directly affected.
What Is Changing, and When?
The DMCCA became law in 2024, but its subscription rules needed secondary legislation before they could take effect. The government originally planned a spring 2026 start, then moved it to spring 2027, and has since brought it forward again.
On 19 October 2026 the government laid the draft Consumer Subscription Contracts (Cancellation and Information) Regulations 2026 before Parliament, alongside draft guidance. Subject to parliamentary approval, the regime will apply to consumer subscriptions entered into on or after 1 January 2027.
The rules are designed to tackle “subscription traps“: free trials that quietly convert to paid plans, renewals people forget about, and cancellation processes that are deliberately hard to find.
Does It Apply to Your SaaS Business?
The regime covers paid, auto-renewing subscriptions sold to consumers. That includes software, apps and digital content as well as physical goods and services. It applies whether the subscription renews for a fixed period or runs indefinitely until cancelled, and it specifically catches contracts that start with a free or discounted trial.
It is likely to affect you if you sell:
- a consumer app or software product on a monthly or annual plan;
- a “freemium” product where users can upgrade to a paid tier that renews automatically;
- a free or discounted trial that converts to a paid subscription; or
- a platform that also sells to sole traders or individuals who may count as consumers.
Purely free subscriptions are not caught, and some sectors with their own rules, mainly telecoms, utilities and financial services, are excluded. Pure business-to-business SaaS is outside the regime, but many SaaS businesses have a mixed customer base. If you cannot be sure every customer is buying for business purposes, assume the rules may apply to some of them.
The Four Main Obligations
1. Clear information before sign-up
Before a consumer commits, you must bring “key information” to their attention. This includes the fact that they will keep paying until they cancel, how often they will be charged, how much, the minimum total they will pay, and when they will receive reminder notices.
This key information must be shown together, separately from your full terms, and without the consumer having to click through to find it. A link to your terms is unlikely to be enough. The final step of sign-up must also include an express acknowledgement that the consumer is taking on an obligation to pay.
2. Reminder notices
You must send reminders before the consumer becomes liable to pay again, including:
- before the first payment after a free or discounted trial ends;
- before renewal payments, at least once in every six-month period; and
- an additional, earlier reminder for certain longer-term contracts, such as annual plans.
Reminders must be sent in writing on a durable medium, such as email, and early enough to give the consumer a real chance to cancel.
3. A new renewal cooling-off period
Consumers keep the existing 14-day cooling-off period when they first sign up. The new rules add a further 14-day cooling-off period after a free or discounted trial converts to a paid plan, and in certain renewal situations, such as rolling onto a new 12-month term.
For services and digital subscriptions, the draft rules provide for a full refund if the service has not started and a proportionate refund if it has. Refunds must generally be made within 14 days. If you fail to give the required cooling-off information, the period can be extended by up to 12 months.
4. Easy exit
Cancelling must be straightforward, with no unnecessary steps. If a customer signed up online, they must be able to cancel online, and the option must not be hidden. Once a subscription ends, you must send an end-of-contract notice and refund any overpayment.
The regulations are still in draft and must be approved by Parliament. Some detail, such as exact notice timings, may change before 1 January.
What SaaS Businesses Should Do Before 1 January
- Map your subscriptions. List every plan, trial and renewal path, and identify which customers could be consumers.
- Redesign the sign-up flow. Put the key information on the checkout screen itself, and add a clear payment acknowledgement at the final step.
- Build the reminder emails. Set up automated reminders before trial conversion and before renewals, and state the timing in your pre-contract information.
- Update your refund logic. Make sure your billing system can issue full or proportionate refunds within 14 days during both cooling-off periods.
- Fix cancellation. If customers sign up online, let them cancel online in a few clicks. Remove “call us to cancel” requirements and retention steps that stand in the way.
- Review your terms. Update your subscription terms, privacy notice and any app store descriptions so they match the new process.
- Train your support team. Staff need to recognise a cancellation request, however it is worded, and process it.
The rules apply to contracts entered into from 1 January 2027, so changes to your checkout and reminder flows need to be live by then.
What Happens If You Get It Wrong?
The Competition and Markets Authority (CMA) and Trading Standards will enforce the new rules. Since April 2025 the CMA has been able to fine businesses directly for breaching consumer law, without going to court. Fines can reach 10% of worldwide annual turnover or £300,000, whichever is greater.
The CMA has said it will focus on helping businesses comply in the early months. However, it has also signalled that serious breaches of well-understood rules could face enforcement from day one. Consumers will also have their own remedies, including the right to cancel and claim refunds where a business fails to meet certain duties.
For a growing SaaS business, the bigger risk may come later. Buyers and investors will check your subscription terms and billing flows in due diligence, and non-compliance can reduce what your business is worth.
How JPP Law Can Help
Our technology and SaaS lawyers can review your subscription terms, sign-up journey and cancellation process against the new rules, and update your terms and conditions before 1 January 2027.
Book a free introductory call to discuss what the changes mean for your business.
