Expert reveals what Burnham’s crackdown on subscription services means for UK businesses
PM Andy Burnham is planning to crack down on subscription services in the UK come January 2027, making it easier for consumers to cancel unwanted subscriptions and potentially saving up to £170 per person1. But what will this mean for UK businesses, especially the companies that rely on recurring revenue?
Richard Hunt, director at Liquidation Centre, provides expert commentary on how UK companies can prepare for the new rules, the potential impact on customer retention and revenue, and whether greater transparency could ultimately create a more sustainable subscription economy.
How to prepare for the new rules
UK businesses should prepare for the crackdown on subscription services by redesigning their sign-up, renewal and cancellation workflows to ensure complete transparency for consumers.
Richard Hunt comments: “Take a look at your sign-up and cancellation processes and ask yourself how easy it is for a customer to join and, importantly, to leave. A good rule of thumb is that if it takes two clicks to sign up, it should take two clicks to cancel. Long or complicated cancellation processes can quickly frustrate customers and leave them with a negative impression of your business. It’s also worth removing unnecessary barriers, such as hidden terms, mandatory phone calls or long chat queues, which can make cancelling feel much harder than it needs to be.
If a customer decides to cancel their subscription, instead of blocking their exit, offer alternatives such as pausing the subscription or downgrading to a cheaper plan. And in the run up to a subscription ending, be as explicit as possible. Set up automated emails before free trials end or annual contracts auto-renew and make sure they detail exact amounts, costs and renewal dates. This removes any confusion or miscommunication between you and the customer.”
The impact on customer retention and revenue
“Unfortunately, companies that are heavily reliant on subscriptions that default to billing when customers forget to cancel are likely to see an immediate drop in recurring revenue. In order to compensate for this loss of passive income, businesses will be required to derive revenue from actual usage and genuine perceived value rather than trapped capital.
With customers able to leave subscriptions more easily, it’s going to be important for businesses to think about retention from the very beginning of the customer journey. Onboarding needs to make the value of the service clear straight away, so customers understand what they’re paying for and why it’s worth sticking with.
We’ll also likely see more flexible subscription options. Companies that offer seamless pause or downgrade options may find that they retain more total customers compared to those offering more rigid plans. And while some businesses may lose customers who were simply forgetting to cancel, the ones who stay are more likely to be engaged with the service. In the long run, that could mean stronger loyalty and more predictable revenue.”
Can greater transparency create a more sustainable subscription economy?
“Greater transparency can help create a more sustainable subscription economy because it builds trust with consumers, reduces churn and encourages companies to be more accountable. Clear pricing and honest reporting also make it easier for people to make informed, more ethical choices, while helping businesses build trust and credibility. It could also go some way towards tackling subscription fatigue. When terms are clear and the customer experience is straightforward, people feel more in control of their recurring spending. Ultimately, clear communication is something businesses will need to get right if they are going to thrive under Burnham’s crackdown on UK subscriptions.”