The DMCCA was published on legislation.gov.uk on 3 June 2024. It establishes a new regulatory regime for large digital platforms, as well as comprehensively reforming existing competition, merger control and consumer law in the UK. You can view other instalments from our DMCCA Briefing Series here (merger control) and here (digital markets regulation).

The DMCCA increases the Competition and Markets Authority's (CMA) powers under which the regulator will be able to directly enforce consumer law rather than go through lengthy court processes. The CMA will be able to award compensation to consumers and directly impose financial penalties on firms. It will be able to impose fines of up to 10% of global annual turnover on businesses found to have infringed consumer law.

The DMCCA also creates new types of unfair commercial practices that mislead consumers into spending, including subscription traps, drip-pricing and fake reviews.

The DMCCA received Royal Assent on 24 May 2024 and will largely be brought into force by regulations. The expectation before the General Election was for most consumer-related provisions to start applying from Spring 2025, with provisions relating to subscription traps to follow a year later.

What this means for financial services firms

• CMA may investigate potential breaches of general consumer protection rules against financial services firms. With its new direct enforcement powers, financial services firms can expect the CMA to take on a more active role in their sector. As well as the compensation and fines mentioned above it can require to be paid, the CMA has been given extensive information gathering powers which include the carrying out of unannounced inspections ('dawn raids').
• FCA will be able to make recommendations to the CMA for regulatory intervention. The DMCCA enables the Financial Conduct Authority (FCA) to make recommendations to the CMA to exercise its powers under the DMCCA. This mechanism could for example be used in cases where the FCA identifies a potential competition concern specifically in digital markets, for which the CMA is considered to have the most suitable powers to take action. The FCA may also be tempted to refer consumer law concerns to the CMA where the CMA's direct enforcement powers may be perceived as a more effective avenue.
• FCA will be able to obtain enforcement orders against firms under its remit. The DMCCA also simplifies and enhances the civil court based enforcement regime for consumer protection law currently set out in Part 8 of the Enterprise Act 2002. This allows certain enforcers to seek a civil remedy, i.e., an enforcement order from the court against a trader for infringement of consumer protection legislation. DMCCA designates the FCA as one of the public designated enforcers for consumer protection orders and undertakings. In broad terms, the FCA may directly negotiate undertakings or apply to the appropriate court for an enforcement order if it considers a person has engaged in a commercial practice in breach of various enactments including the Consumer Credit Act 1974, Consumer Rights Act 2015, and the Payment Accounts Regulations 2015. It remains to be seen whether these improvements to the general consumer protection regime will prompt the FCA to use these tools ahead of its specific consumer protection powers under financial regulation in some circumstances.
• Addition to the unfair commercial practices list and new offence: The DMCCA also re-states and revises the Consumer Protection from Unfair Trading Regulations 2008 and makes the omission of material information from an invitation to purchase a separate unfair commercial practice and an offence. Such material information will include clearer pricing information on products, so for example, e-commerce sellers and platforms should ensure that prices in adverts and product listings are transparent regarding the actual costs of the product to the consumer. Therefore the DMCCA prohibits the ‘drip pricing’ of unavoidable fees by requiring traders to set out in an invitation to purchase the total price of a product including any mandatory fees, taxes and charges that apply to the purchase of a product.
• Specific exclusions for financial services: The DMCCA provides consumers with significant new rights in relation to subscription contracts and consumer savings scheme contracts. However most financial services contracts and activities have been excluded from these requirements, as there are already regulations that apply to these contracts which provide equivalent or higher consumer protection under the existing financial services regulation.