CMA prepares for revamped UK consumer protection regime

Competition and consumer law experts Angelique Bret and Tadeusz Gielas, of Pinsent Masons, were commenting on two parallel CMA public consultations on proposed draft guidance to reflect important changes introduced by the Digital Markets, Competition and Consumers Act 2024 (DMCC Act).

The first consultation concerns proposed draft guidance that updates and will replace existing CMA guidance on the investigatory and enforcement powers that the CMA, along with certain other UK enforcement bodies, can use to safeguard consumer rights (‘enforcement guidance’).

Another draft CMA guidance, which is the subject of a second consultation, will replace existing guidance on applying the Consumer Protection from Unfair Trading Regulations 2008 (CPRs), with draft new guidance on unfair commercial practices (UCPs) to reflect that the CPRs have been replaced and expanded by the DMCC Act (‘UCP guidance’).

The draft enforcement guidance describes the principal consumer laws which the CMA will enforce by way of investigation and fines. It also describes how the authority will cooperate with other consumer law enforcers, both domestically and internationally, to ensure traders are complying with their legal obligations. The guidance also sets out how the CMA will decide which cases to take on – for instance, its prioritisation principles and when it will use its civil or criminal enforcement powers.

Bret said: “The DMCC Act created a ‘dual track’ enforcement regime for UK consumer protection law – the pre-existing ‘court based’ regime has been expanded significantly, and a brand new ‘direct enforcement’ regime was also introduced. The ‘direct enforcement’ powers are exclusive to the CMA and elevate the risk of breaching UK consumer protection laws to the status of breaching competition law, including fines for businesses up to 10% of turnover. Businesses should therefore be reviewing their marketing and pricing and ensuring that the customer journey, from start to finish, is compliant with consumer laws, putting robust compliance plans in place”.

The draft UCP guidance aims to assist businesses understand how the UCP provisions in the DMCC Act, which replace and update the CPRs, apply to a wide array of commercial practices with the potential to affect consumers. The UCP provisions prohibit actions contrary to the requirements of professional diligence, misleading actions and omissions, aggressive practices, the omission of material information from an invitation to purchase - which includes a prohibition of “drip pricing” of mandatory charges. The provisions further include 32 commercial practices which are in all circumstances considered unfair - including a new banned practice in relation to fake consumer reviews - and promoting unfair commercial practices in codes of conduct.

The draft guidance illustrates how the UCP provisions may apply in practice and is intended to help traders to comply with them.

Gielas said: “The draft UCP guidance consultation is an important step in clarifying substantive aspects of UK consumer protection law, not only to reflect DMCC Act reforms, but also because the existing guidance was created over 16 years ago and needs updating to reflect contemporary trading practices and business models.”

An entire annex of the draft guidance is dedicated to explaining how the new “per se” prohibition of fake reviews is expected to apply and how businesses can achieve legal compliance. 

Gielas said: “The outright ban on fake reviews is one of the most significant UCP provisions introduced by the DMCC Act and hopefully businesses will feel reassured by the CMA’s detailed guidance and clarifications. Over recent years the CMA has variously issued consumer law compliance guidance for businesses in particular sectors or involving specific practices, reflecting insights from the authority’s own projects and investigations.”

For example, the CMA has recently finalised its consumer law compliance guidance for trader recommendation platform businesses following earlier consultation; as well as compliance guidance in areas such as unregulated legal services and ‘greenwashing’ in the fashion industry.

“Such targeted guidance will also need to be considered by traders depending on their area of business,” said Gielas.

The DMCC Act changes, including the CMA’s new direct enforcement powers, are expected to enter into force on 6 April 2025. Substantive changes to UK consumer protection law resulting from the DMCC Act are expected to enter into force in stages, from April 2025 well into 2026 – to be confirmed by separate regulations.

Clare Francis, commercial law expert at Pinsent Masons, said: “Much like the CMA’s separate recent consultation on the subscription contracts regime, which also concerns DMCC Act changes, the UCP guidance touches on a wide range of commercial practices and businesses may wish to respond to the consultation and help shape the final outcome and ensure it reflects modern trading practices.”

The two parallel consultations are both open until 22 January, with the CMA encouraging feedback from a wide range of stakeholders, including businesses, consumer groups, and the general public.