In February, we wrote about the CMA's consultation on its updated guidance about unfair terms in consumer contracts, which ended last week. On 23 March, the CMA published its annual plan for 2026-2027, in which it made clear that it would focus its consumer protection work on the more egregious practices where the law is clear, including contract terms that are clearly imbalanced and unfair, including those that impose unfair exit charges on consumers.

The law on unfair terms is contained in the Consumer Rights Act 2015, but the CMA now has much more robust enforcement powers and can take direct enforcement action in relation to unfair contract terms. Where traders use prohibited, unfair or non‑transparent terms or consumer notices, they could face court proceedings and penalties of up to 10% of global turnover or £300,000 (whichever is higher) from the CMA.

Unfair terms are easy for the CMA to spot if they are looking at a trader's website – possibly investigating other issues such as fake reviews – so it's potentially an easy thing for them to enforce.

We find it interesting that the CMA has specifically called out unfair exit charges.  As well as the eight investigations that they launched in November on various aspects of consumer law, they have also launched one on exit charges, where they appear to be concerned both about the exit charges themselves and how they were presented. So we thought we'd take a closer look at what they said about exit charges in their guidance.

It's not unusual for contracts to include terms that say that if you cancel a fixed-term contract early, you have to pay for the rest of the fixed term, or at least a proportion of it. The CMA isn't happy about this and says in its guidance: 

"Terms must not go beyond what is necessary to achieve their objectives. Terms are therefore more likely to be unfair if they have the effect of imposing disproportionate fees or charges on a consumer who decides to end the contract early, or of imposing disproportionate sanctions for breach of contract."

Examples of potentially unfair terms include:

• Requiring payment of all outstanding sums on early termination where the trader is no longer providing anything in return, and where the fee exceeds either the value the consumer actually received by choosing that contract, or the actual costs the trader incurs because of the early termination.
• Early termination fees that fail to reflect savings to the business from no longer supplying the service, the trader's ability to mitigate losses (for example, by finding another customer), or the financial benefit of receiving money earlier than expected.
• Compensation clauses that go beyond a reasonable pre‑estimate of loss, including fixed or arbitrary sums not linked to actual loss, charging both costs and lost profit in a way that amounts to "double recovery" and requiring consumers to pay indemnity-level legal costs.
• Excessive interest rates on outstanding amounts (that is, far above base rate).
• Inflated storage or similar charges where a consumer fails to take delivery.
• Vague or discretionary penalty clauses, where the trader can effectively decide the level of the charge after the event.
• Any combination of terms that would allow the trader to recover the same loss twice. 

The CMA says termination fees are more likely to be fair if they are written in plain, transparent language, and reflect a genuine, proportionate pre‑estimate of the trader's likely loss.

A sliding scale of charges may be acceptable, but only if it is not punitive and gives consumers clear certainty about what they would owe if they cancel.

So what does this mean for traders?

Although the CMA is not formally rewriting the law, its latest signals suggest a material shift in enforcement priority. In practice, the regulator may be raising the bar on what it expects businesses to justify as fair.

Any CMA finding of unfairness is, of course, open to challenge in the courts. But given the size of potential penalties – and the CMA's willingness to act – now is the moment for traders to review their contract terms, especially around early termination charges, proportionality, mitigation, and clarity.