A new consumer protection regime has come into force in the UK, granting the Competition and Markets Authority (CMA) the power to impose fines of up to 10% on global turnover of companies that breach consumer protection laws.
The changes under the Digital Markets, Competition and Consumers Act 2024 (DMCCA) provide the CMA with the authority to determine whether consumer law has been infringed.
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Breaching undertakings given to the CMA can result in fines of “up to 5% of global turnover” for the companies, along with “additional daily penalties” for ongoing non-compliance, the CMA statement said.
Failure to provide the requested information without a valid reason, concealing evidence, or submitting false information can lead to fines of “up to 1%” of a company’s global turnover”, with further daily penalties imposed for continued failure to comply.
The CMA can take direct action on “any breaches directly and proportionately” without needing to pursue cases through the courts including “through consumer redress and fines”.
According to the CMA, the new regime is designed to “safeguard consumer interests while also enhancing trust”.
The regulator also highlighted the significance of “fostering a level playing field for fair-dealing businesses – so they can grow and invest, confident that competitors cannot gain an advantage by breaking the law”.
To provide businesses of all sizes with “clarity and predictability around implementation of the new regime”, the CMA published an “Approach to Consumer Protection” document, outlining how it intends to exercise its new powers.
The publication set out enforcement priorities and described how the authority will reflect the government’s “strategic steer”, as well as planned improvements in its operations.
These improvements will be grouped under a framework of proportionality, predictability, process and pace, the CMA said.
The CMA’s document also said the new regime will ensure “fines are proportionate” and would reflect the seriousness of the behaviour involved.
Besides, the DMCCA introduced several key changes, including a ban on the commissioning and publication of fake reviews and new rules requiring greater transparency around pricing.
Practices such as “drip pricing” – where additional costs are revealed only late in the purchase process – are now prohibited.
While guidance has been issued for long-established legal requirements, the CMA “will consult further on newer aspects which have created some uncertainty – such as fixed-term periodic contracts”.
A final guidance on these provisions is anticipated to be published in the “autumn”.
Furthermore, the CMA will focus enforcement efforts on conduct that causes significant harm to consumers or constitutes clear breaches of the law.
This includes “aggressive sales practices” targeting “vulnerable” consumers, “hidden fees”, “objectively false information” given to customers and “unfair contract terms”.
In a statement, the UK Department for Business & Trade said: “The government strongly endorses the CMA’s intended approach, which aligns with the draft Steer, and the role it sees for robust and effective consumer protection in supporting the growth mission.
“In its role as the CMA’s sponsor department, and reflecting its responsibility for the wider framework for consumer policy, DBT will continue to support the CMA as it delivers the new consumer protection regime, and help to ensure appropriate co-ordination across the consumer landscape.”
