UK plans to ease cancelling subscriptions come under fire

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Ministers’ plans to force companies to make it easier for UK customers to cancel subscriptions have been attacked by media and small business organisations, which claim the new rules are onerous and costly.

Broadcaster Sky, along with groups representing newspapers and small businesses, said the government’s proposals to tackle the problem of customers being billed for unwanted subscriptions were too prescriptive.

Ministers want companies to send customers more frequent reminders before a contract renews automatically, and to give them simpler and more straightforward means of exiting rolling contracts.

The proposals, presented in the Digital Markets, Competition and Consumers Bill now going through parliament, are a response to the explosion in the number of consumers using music, streaming and online news subscription services.

According to official estimates, the new law could save consumers an average of £290mn a year over the next decade by helping them ditch unwanted but uncancelled subscriptions — the so-called subscriptions trap.

In a letter seen by the Financial Times, Tina McKenzie, policy chair of the Federation of Small Businesses, told business secretary Kemi Badenoch this week that the bill would target “a much greater range of businesses and services than intended” and that FSB members would be “disproportionately affected”.

McKenzie said a requirement to allow customers to cancel a subscription by giving notice “by any means” could force businesses to process cancellations submitted beyond their usual communication channels, including through social media.

For small companies, such requests would be “difficult to keep track of and manage for small businesses, or require entirely online businesses to establish large operations for handling post”, she wrote.

The rules would also impose a cooling-off period starting at the end of any free or introductory period to a subscription. McKenzie said that while the FSB supported an earlier version of the government’s proposals to make it easier to cancel subscriptions, the Bill went “far beyond the approach consulted on” last year.

Meanwhile Sky, responding to MPs examining the bill, said it had “serious concerns” over the plans for subscriptions. The company acknowledged that some industry practices “cause consumer harm” but said the bill’s provisions were “too prescriptive and broadly drawn”.

They “will add significant costs on to businesses — and by extension consumers — for marginal consumer gains”, Sky said, describing the plans as “poor policymaking”. It said that it does not “engage in practices that roll our customers over into long-term contracts that they cannot get out of”.

According to a government impact assessment published in April, the changes would result in one-off costs of £315mn to businesses. They would also face costs of £1.2bn through lost revenue and £1.7bn for giving customers reminders and extra cancellation methods, it estimated.

Owen Meredith, chief executive of News Media Association, which represents the UK’s newspaper industry, also said the bill’s provisions “could undermine publishers’ efforts to build a truly sustainable future for journalism if left unchecked”.

He added that the legislation risked “creating information fatigue” and increasing costs to households.

However, Rocio Concha, director of policy and advocacy at consumer group Which?, said the proposals would help people end contracts in a more cost-effective and timely manner.

Curbing “subscription traps” would give customers “more confidence to pay for products and services because they know they will be able to more easily exit contracts”, she said.

In a statement, the FSB said the bill’s measures were “a good example of excessive regulatory zeal” and that “the original proposals were the right approach”.

The business department said: “Consumers spend around £1.6bn a year on unwanted subscriptions. The Digital Markets, Competition and Consumers Bill will ensure consumers are protected from subscription traps while also ensuring businesses are not overburdened by regulatory barriers.”