1 | The increasing regulatory landscape driving litigation risk

How might it impact your business?

Heightened regulatory scrutiny

A key example of increased regulatory scrutiny for any business selling or advertising to consumers is the Digital Markets, Competition and Consumers Act 2024 (DMCCA), which is the biggest shake-up of consumer protection law in recent years. The DMCCA provided the Competition and Markes Authority (CMA) with an enhanced consumer protection toolkit, enabling it to levy financial penalties of up to 10% of worldwide turnover on businesses that violate consumer protection law, without the need to resort to court proceedings.

The DMCCA also introduced a slew of new requirements on businesses to protect consumers, including rules which are designed to increase price transparency and stop “drip pricing” (adding further costs as the customer goes through a purchase journey) and requiring businesses to take steps to prevent the publication of fake and misleading product reviews. The newly issued guidance is detailed and complex, and places a burden on businesses to ensure compliance. Businesses covered by the new rules should ensure that they have proper systems and controls in place to ensure and review compliance.

Since the introduction of the DMCCA in 2024, the CMA has been consulting on new guidance, issuing new guidance, and has been ramping up enforcement action in the consumer protection space. In November 2025, the CMA opened investigations into eight businesses for alleged violations of price transparency rules, and sent warning letters to a further 100 businesses over compliance. In March 2026, the CMA opened investigations into five businesses in connection with its new powers in relation to fake and misleading reviews. In April 2026, the CMA levied its first fine of £4.6m (with an additional c.£750,000 in redress payable to consumers). We expect the CMA’s enforcement action to continue to ramp-up in the coming months and years, and the CMA has confirmed that this will be particularly so in areas of essential household spend, fake reviews, unfair contract terms and drip pricing where businesses fail to change their behaviour.

The litigation ecosystem

The UK’s claimant ecosystem continues to strengthen as a result of a number of factors.

First, the UK legal system is now more open to US-style class actions and mass claims than ever before. Since 2015, competition claims can now be pursued on an “opt-out” basis on behalf of (in some cases) groups of millions of consumers, many of whom are not aware they are being represented. This “opt-out” regime has expanded dramatically in recent years. Even for traditional claims, greater sophistication in “book-building” claims is enabling vast numbers of consumers to be represented in group claims, such as in the “Pan-NOx” litigation over diesel emissions “devices” in cars, which has over one million claimants signed up. There is also greater judicial willingness to permit these types of claims to proceed. In some cases, claims are pursued (successfully) against parent companies for the actions of their overseas subsidiaries, such as in the case of mining firm BHP, which recently lost a major liability trial over the collapse of a dam in Brazil.

Second, third-party litigation funding continues to be a present force in the UK. It has gained increasing prominence as an alternative asset class, which is attractive to investors because of high potential returns. There is also increased consumer awareness of third-party litigation funding as a result of high-profile funding of group claims (eg by the Post Office sub-postmasters) and large competition class actions pursued on behalf of classes of affected individuals on an “opt-out” basis (eg Kent v Apple). The funding of large-scale claims on behalf of consumers has faced some headwinds, but the UK government is taking steps to remove some of those. In particular, the UK government has signalled that it will legislate to address the Supreme Court’s decision in PACCAR, which made it significantly harder for third-party litigation funders to claim a percentage of damages in a successful claim in some circumstances.

Third, there is a growing group of claimant law firms in the UK, set up to pursue large scale claims against corporates on behalf of individual, or more commonly, groups of consumers. The firms themselves are often offshoots of US law firms, which bring years of experience of similar claims in the US. They seek out opportunities to pursue opt-out claims, as well as using sophisticated methods to book-build more traditional consumer claims (such as the vast “Pan-NOx” litigation). When searching for claims to pursue, regulatory investigations and findings are often used as a jumping off point for identifying potential harms. Claims that are rooted in wide consumer harms are particularly attractive for inviting funding given the large number of potentially affected individuals, and ultimately, there is significant funding available to claimant firms to pursue claims against deep pocketed defendants. Those claims are most attractive if they can be pursued on an “opt-out” basis, or a large group of claimants can be book-built, to maximise the claim value (and ultimately the potential damages). The claimant firms are not afraid to use novel strategies in maximising the value of claims, including seeking to bring what are really consumer protection claims within a competition “wrapper” in order to bring them on an “opt-out” basis.

In April 2026, the UK Law Commission announced a project, sponsored by the UK Government, to assess whether the UK should introduce an "opt-out" (ie class action) regime for breaches of consumer laws, and the design of such a regime if it were implemented. If such a regime were implemented, it would be a seismic shift for consumer protection in the UK.

What does this mean for my business?

These factors lead to a confluence of increasing litigation risk for consumer-facing businesses. Increased regulatory scrutiny brings its own financial, reputational and business risks, but it also provides a positive feedback loop into an already heightened litigation risk landscape.

Getting this wrong, by failing to identify and mitigate litigation risk, can be extremely costly for consumer-facing businesses, and result in financial and reputational damage that can harm the business for years to come.