The DMCC has three key pillars:

• Expanded consumer protection - The DMCC updates the unfair commercial practices 'blacklist' and strengthens other consumer rights. The CMA is given the power to enforce consumer law directly rather than going through the courts and, notably, can fine businesses for breaches.
• Regulation of digital markets - The DMCC creates a new digital competition regime equivalent to the EU's Digital Markets Act.
• Greater promotion of competition - The DMCC increases existing merger thresholds and strengthens the CMA's investigatory and fining powers in this area.

This alert focuses on the expanded consumer protection regime.

The CMA's increased enforcement powers

The DMCC expands the CMA's enforcement powers substantially. The CMA previously had to go to court to secure compliance orders to combat breaches of consumer protection laws, and the court had no power to impose fines. The CMA is now able to directly enforce breaches. Organisations can appeal the CMA's decision to the High Court.

The relevant 'consumer protection laws' that can be directly enforced include: Consumer Rights Act 2015, Consumer Credit Act 1974, Sale of Goods Act 1979 and certain DMCC provisions (such as those on unfair commercial practices).

The DMCC gives the CMA the new power to fine organisations up to £300,000 or up to 10% of their global annual turnover (whichever is greater) for substantive breaches of the legislation set out above.

Fines may also be imposed for procedural breaches or refusal to cooperate with a CMA investigation. In certain circumstances, individuals may be fined.

Relationship between the CMA and the FCA

Alongside direct enforcement by the CMA, certain bodies are appointed by the DMCC as 'designated enforcers'. 'Public designated enforcers' include the FCA, the ICO and OFCOM. These organisations can apply to court to enforce breaches of certain 'consumer protection enactments'. These are wide ranging, including the legislation noted earlier as well as the likes of, for example, the Misrepresentation Act 1967.

Following the DMCC, there are now areas of regulatory and enforcement overlap between the CMA and the FCA. For example, the CMA has the power to directly enforce the Consumer Credit Act 1974 – something the FCA is also able to do. In practice, this may mean the CMA and FCA work closer together to enforce consumer protection laws.

Whilst the FCA's enforcement activity is limited to regulated products and services, the CMA has a broader outlook and can consider both regulated and non-regulated business. We may find the FCA referring matters to the CMA where it perceives the CMA's enforcement powers to be a more effective avenue for regulation.

Consumer rights updates

Part 4 of the DMCC strengthens pre-existing consumer rights through, for example, expanding the prohibition on the omission of material information from an invitation to treat (e.g. an advert) to combat drip-pricing, creating significant reforms to subscription contracts and granting consumer savings schemes greater protection.

The DMCC creates a de facto unfair commercial practice of 'fake consumer reviews'. This imposes a potentially burdensome obligation on organisations. Not only is submitting or commissioning fake reviews forbidden, but organisations must not publish reviews without taking reasonable and proportionate steps to ensure they are genuine and not misleading. As such, organisations will have to take proactive steps to satisfy themselves that reviews are genuine and not misleading. The CMA is working on draft guidance for organisations on this obligation, which it has said will be published later this year.

What should organisations do now?

Organisations should be taking steps to mitigate the liability risks that the DMCC presents, particularly ahead of the rules on consumer protection coming into force (the government has indicated this is likely to be Spring 2025). This is important given the CMA's new ability to fine for breaches and the potential interplay between the CMA and the FCA.

The provisions on unfair commercial practices, and the CMA's ability to fine for breaches of consumer protection laws, could arise in the context of advertising, promotions, contract and insurance policy terms, pricing, goods and services provided and complaints handling. A risk / health assessment of customer facing documents might be considered, to ensure these are clear, unambiguous and comply with, in particular, unfair contract terms legislation. This may result in the following needing to be updated:

• Consumer contracts
• Insurance policies
• Pricing information
• Customer correspondence
• Website information
• Internal compliance policies

Reforms such as the prohibition on 'fake consumer reviews' require organisations to take pre-emptive measures. For instance, organisations may need to refresh their processes to ensure appropriate monitoring or moderation is in place.

Organisations will need to stay informed of the contents of the DMCC and any upcoming secondary legislation or guidance.

DACB's specialist commercial and regulatory team is highly experienced in dealing with a range of matters including commercial contracts, consumer protection issues and financial services regulation. Our expertise informs our proactive practical advice to clients on compliance with, and the design of controls to manage, regulatory requirements and legal liabilities.