CMA publishes draft revised guidance on unfair contract terms under the Consumer Rights Act

The question

What does the CMA's incoming revised guidance on unfair contract terms under the Consumer Rights Act 2015 (CRA) mean for consumer terms and notices?

The key takeaway

The CMA’s draft guidance (which it is currently consulting on) reinforces the expectation of fairness and transparency in consumer contracts. The new stinger is that, under the Digital Markets, Competition and Consumers Act 2024 (DMCCA), the CMA is now backed by stronger enforcement powers in relation to infringements of consumer protection law. Common terms in consumer contracts include variation rights, automatic renewal, price changes, dispute resolution and liability caps, and all these will come under greater scrutiny moving forwards. Businesses should review their standard terms and conditions for their consumer contracts to ensure that they meet the statutory fairness and transparency requirements, so as to avoid potential penalties from the CMA.

The background

Under the CRA, the law on unfair contract terms (which has not changed since 2015) requires consumer contract terms and notices to be fair and transparent. A term is unfair if, contrary to good faith, it causes a significant imbalance to the detriment of the consumer. Unfair terms are not binding on consumers (although traders remain bound).

The CMA is responsible for enforcing the CRA. Under the DMCCA, it is now empowered to use both direct and court-based enforcement action, including the power to impose penalties of up to £300,000 or 10% of global annual turnover (if greater), for breaches of consumer protection law, such as imposing unfair contract terms. All UK-based B2C contracts and notices from 1 October 2015 fall under the CRA and are within the CMA's remit.

The development

The CMA is consulting on revising its current unfair contract terms guidance. The current guidance dates back to 2015 and is viewed as quite unwieldy (particularly due to its lengthy main guidance and annexes – one of which was originally published in 2008). The draft streamlines and brings the guidance up to date for the modern digital era. It also imposes a sharper test for fairness and transparency, highlighting examples of high-risk terms.

Fairness and transparency

The new guidance emphasises the currently existing principles:

• fairness is assessed on a term-by-term basis, focussing on potential imbalance, not harm
• the good faith requirement is wide-ranging
• transparency is a must, so as to allow the average consumer to understand their rights and obligations, and to make informed choices in relation to them.

As before, core terms and pricing are exempt from the fairness test only if they are transparent and prominent. Traders are therefore required to actively highlight such terms, especially where they are more onerous or unusual.

High-risk terms

The guidance highlights the following potentially high-risk terms:

• binding consumers to hidden terms
• unilateral variation clauses (such as changes to service scope, functionality or price), particularly when broad in scope
• automatic renewal for fixed-term contracts, where consumers must give unreasonably early notice or overcome burdensome formalities to exit the contract
• terms which give traders the final say on disputes, such as compulsory arbitration for low value claims and mandatory ADR substituting court access
• exclusion and limitation of rights and duties (aka 'disclaimers' and 'exemption clauses'), particularly where they go beyond protecting the trader's legitimate business interests
• termination and/or breach by consumers, where traders are permitted to retain prepayments and/or impose fees or sanctions.

Why is this important?

Digital content, online services, subscription models and consumer notices across many sectors, including in-app messaging and on-screen pop ups, will be caught by the draft updated guidance.

In restating its expectations for compliance with the CRA, the CMA has removed ambiguity surrounding application of consumer protection to digital platforms, making clear that it will utilise its enhanced powers under the DMCCA to enforce compliance and impose penalties. Businesses operating at scale should strive to comply with the guidance as a minimum across both standard and bespoke consumer contracts and notices.

Any practical tips?

Businesses should consider the following:

• evaluating standard consumer contracts for fairness, transparency and good faith (so as to identify potentially high-risk terms which may need to be amended)
• ensuring potentially unfair terms are as narrow in scope as possible, tied to specific triggers, explained in advance
• assessing their consumers' journey as a whole: including ensuring that pre-contract information steps, renewal reminders and cancellation pathways provide sufficient information to allow the average consumer to understand their rights and obligations, and to make decisions accordingly
• introducing an internal CRA checklist for all consumer contracts and notices going forwards, to be able to demonstrate compliance if the CMA takes an interest.

Spring 2026