DMCCA: The New Era of Consumer Protection and What it Means for Dealers and Repairers

Last year we discussed the Digital Markets, Competition and Consumers Act 2024 (DMCCA) and its significance for consumer protection. The DMCCA represents the most significant shift in consumer law in nearly a decade. By empowering the Competition and Markets Authority (CMA) with far-reaching tools to tackle unfair behaviour, the Act has already prompted us to advise dealerships, repairers, and other motor trade businesses on transparency, compliance, and accountability.

On 11 December 2024, the CMA issued new guidance that clarifies how it intends to implement its direct enforcement powers under the DMCCA. This guidance sheds fresh light on the CMA’s methods, priorities, and expectations.

In short, the CMA can move more swiftly and directly against businesses that violate consumer law, without always resorting to lengthy court processes. The stakes are high: from immediate corrective orders to penalties that can reach up to 10% of global turnover, the CMA’s direct enforcement will alter how you approach everyday operations, sales strategies, complaint handling, and advertising.

In this article, we will help you understand what this new guidance means for your business. We’ll break down the CMA’s clarified approach, consider how direct enforcement changes the compliance landscape, and offer practical steps you can take to minimize risks while harnessing compliance as a competitive advantage.

The Act in a Nutshell

The DMCCA establishes a framework that the CMA will use to promote fair competition and protect consumer rights. Some commentators are mistakenly thinking that the Act focuses only on tech giants. While the DMCCA does aim to address competition and consumer issues in digital markets, its consumer protection provisions apply broadly across all consumer-facing industries. This means that businesses in traditional sectors, including motor dealerships and repair services, are very much within its scope.

Here are some central components of the Act, with emphasis on consumer protection and their implications for the motor industry:

Direct enforcement and immediate intervention: The DMCCA empowers the CMA to act immediately on consumer protection breaches without needing court intervention. This allows for on-the-spot penalties and rectifications

Importantly, the CMA’s ability to impose penalties, including substantial fines, no longer relies exclusively on a successful court action. Direct enforcement allows them to bypass prolonged litigation, escalating the speed at which non-compliant businesses face financial consequences.

Transparency and Fairness Requirements: Under the DMCCA, businesses must be clear and honest in their representations, whether in marketing, finance agreements, or warranty terms. This enhanced focus, of course, corresponds to the recent hoopla around financing commissions, but it’s important to recognise that the Act’s focus on transparency is much broader.

Beyond just addressing finance commissions, the DMCCA mandates clarity in all consumer interactions, covering everything from pricing structures to repair warranties and service plans. For motor dealers, this means not only transparent disclosures around commissions but also ensuring that every part of the consumer experience—whether advertising, contract terms, or after-sales service—is straightforward and easy for customers to understand. Ambiguity, omissions, or complex terms that could be perceived as misleading are now high-risk areas, potentially drawing the CMA’s attention and enforcement action.

Data Privacy Obligations: With vehicles and services increasingly data-driven, the DMCCA aligns with GDPR standards, ensuring that consumer data is handled responsibly. For motor businesses that collect customer data—whether for maintenance reminders, service records, or connected car functionalities—this is a reminder to safeguard data and respect privacy.

Enhanced Monitoring and Compliance Reporting: The CMA has the power to mandate regular compliance reporting from high-risk sectors. For the motor trade, this could mean periodic audits and documentation requirements to demonstrate adherence to consumer protection standards, particularly in areas like advertising transparency, fair dealing in sales, and handling of consumer complaints.

Focus on proactive and ongoing compliance

The DMCCA’s direct enforcement powers change the nature of compliance with consumer protection law. Previously, many businesses approached compliance largely as a reactive measure—waiting for consumer complaints or, at worst, the threat of a formal investigation. The DMCCA’s framework and the CMA’s approach to that framework herald a shift in mindset.

It’s hard to overstate the significance of the shift.

In addition to introducing new compliance measures, such as “stop now” orders and provisional directions, which can have almost instantaneous effect without the need for any court process, the spirit of the guidance focuses on swift and early intervention by the CMA.

The guidance also makes clear that the CMA is not interested merely in punishing breaches but in assuring ongoing compliance. In addition to being able to levy significant fines, the CMA can issue Enhanced Consumer Measures (ECMs). While ECMs are not new in concept, the guidance provides a granular roadmap for when and how they will be applied. These measures can compel a business to go beyond just stopping a problematic practice—to provide refunds, send corrective communications to past customers, or improve staff training. The new guidance makes it clear that ECMs will be used strategically to prevent repeat offences and restore consumer trust.

The CMA’s guidance clarifies that resolving one enforcement action does not end its scrutiny. It will monitor compliance going forward, possibly requiring periodic compliance reports or audits. The guidance details how this monitoring might occur, including what documentation you must keep to show continued adherence. For a motor retailer who has adjusted terms after a CMA order, don’t expect the CMA to simply vanish; it may return to confirm you’ve sustained those improvements. Preparing for ongoing scrutiny and embedding compliance into everyday practice is therefore critical.

In short:

Proactive Risk Identification: It’s no longer sufficient to wait for an issue to surface. The CMA’s direct enforcement powers mean you need to assess your consumer touchpoints carefully—advertising materials, website listings, showroom notices, test-drive policies, service agreements, and complaints handling procedures—to identify potential pitfalls before the CMA does.

Continuous Risk Monitoring: Compliance is not a one-off exercise. The CMA expects businesses to maintain ongoing vigilance. The guidance hints that the CMA will periodically check if previously identified concerns have truly been resolved, and whether businesses have implemented meaningful preventive measures.

Training and Internal Communication: The CMA’s guidance emphasizes that businesses should be able to demonstrate that their staff understand consumer protection obligations. This means investing in regular training sessions, policy briefings, and internal checks so that everyone in your dealership—from sales executives to service department staff—is on the same page.

What are the implications?

Short-Term Implications: Immediate Compliance Adjustments

On-the-Spot Fines and Corrective Orders: With the CMA now empowered to issue penalties directly, minor issues such as misleading advertising or hidden fees could result in on-the-spot fines. Dealers should prepare by ensuring all consumer interactions—whether online, in advertising, or on the showroom floor—are clear, compliant, and thoroughly documented.

Prompt Issue Resolution: The CMA can demand immediate corrections for compliance issues. For example, if a sales document contains ambiguous terms regarding a vehicle’s condition or warranty coverage, the CMA may require dealerships to correct the language and notify affected consumers. Dealers and repairers should ensure that compliance resources are readily available to manage such demands effectively.

Long-Term Implications: Ongoing Compliance and Consumer Trust

Heightened Monitoring Pressure: Over time, the DMCCA will likely lead to more proactive compliance checks across sectors. For motor dealerships, this means embedding compliance into daily operations and developing processes to audit practices in areas like service contracts, finance agreements, and warranties.

Reputation and Consumer Trust: As direct enforcement actions become public, consumer awareness of compliance will likely increase. Dealerships with visible CMA penalties could face reputational damage, while those that proactively adhere to transparency standards can build consumer trust and set themselves apart in the marketplace.

Industry-Wide Enforcement Trends: As the CMA gains enforcement experience under the DMCCA, it may identify recurring issues in the motor trade—such as misleading service packages or unclear finance terms. Keeping abreast of CMA actions and adjusting practices to align with emerging trends will be crucial for staying compliant and competitive.

How MILS Can Support You

Navigating these changes can be complex, but MILS is here to help. Of course, you have the confidence that we will help you address specific matters that arise as part of your annual package and retainer. If a compliance issue does arise, MILS is also available to provide real-time guidance. From advice on rectifying breaches to strategies for handling CMA interventions, we can help you respond swiftly and minimise disruption to your business.

We will also continue to publish, as part of an ongoing series of articles for our members, updates on CMA Guidance, which we expect early this year, and industry trends.

But we can also work with you, on a bespoke fixed-fee basis to help you prepare for the new compliance landscape. Specifically, we can work with you to:

Conduct Comprehensive Compliance Audits: Our team can assess your existing consumer-facing documents and sales processes, including sales agreements, warranty terms, and advertising materials, to ensure they meet the DMCCA’s transparency and fairness requirements. When needed, we can work with you to reframe or redraft your core business documents. This proactive approach helps minimise the risk of on-the-spot fines and corrective orders.

Offer Customised Training for Sales and Service Teams: We can provide targeted training sessions to help your staff understand the new consumer protection standards, empowering them to communicate clearly and accurately about vehicle conditions, service terms, and complaint handling. Well-trained staff reduce compliance risks and contribute to a positive customer experience.

The Road Ahead: A Commitment to Consumer Protection as a Business Advantage

The new guidance on how the CMA will use its new powers highlights a shift towards significantly higher standards in consumer protection and fair competition, creating both challenges and opportunities for motor dealers and repairers. Embracing these standards can set your business apart, building consumer trust and positioning you as a leader in responsible, transparent practice.

The guidance makes clear that this is all less about introducing novel legal concepts and more about altering the pace, depth, and manner of enforcement. The end result is a landscape where compliance is not just a baseline but a dynamic, regularly tested aspect of your business operations.

With MILS by your side, you can navigate these new regulations with confidence. Whether through proactive compliance measures, ongoing training, or strategic guidance during CMA interactions, we are here to ensure your business stays compliant, competitive, and customer-focused in the new era of consumer protection.