The CMA's new guidance on unfair contract terms:

What it means for your consumer communications

An Amplifi analysis of CMA37 - the updated guidance on unfair contract terms under the Consumer Rights Act 2015 - covering the transparency and intelligibility requirements, the CMA's new enforcement powers, and how Amplifi's four-dimensional intelligibility testing maps directly to the rules firms must now meet

Introduction

What this article covers: what changed in the CMA's July 2026 guidance, the six core concepts that determine compliance, the transparency test in detail, the new enforcement powers, how Amplifi's four intelligibility dimensions map to specific CMA rules, the four gaps that remain beyond document-level assessment, and the compliance checklist firms should act on now.

In July 2026, the Competition and Markets Authority (CMA) published a substantially updated version of its guidance on unfair contract terms - CMA37. Issued under the Consumer Rights Act 2015 (CRA) and backed by direct enforcement powers under the Digital Markets, Competition and Consumers Act 2024 (DMCC Act), the guidance significantly raises the standard for transparency, intelligibility, and structural presentation of consumer contract terms. Penalties for breach are up to 10% of global annual turnover or £300,000 - whichever is greater.

Amplifi responded formally to the CMA's consultation on the draft guidance in March 2026, focusing on the distinction between readability and intelligibility and the risk of firms conflating the two. Since then, Amplifi has mapped its full suite of intelligibility assessment capabilities - linguistic, structural, visual, and numerical - directly to the specific CMA rules the guidance now imposes. This article presents that mapping in full.

Related reading: Intelligibility vs readability - the legal distinction  |  What is the FCA Consumer Duty?  |  AI-generated content and FCA compliance

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What is CMA37 and what has changed?

CMA37 is the CMA's primary guidance on the unfair contract terms provisions in Part 2 of the Consumer Rights Act 2015. The July 2026 update is the most substantial revision since the original guidance was published in 2015 - and the first to be backed by direct CMA enforcement powers under the DMCC Act 2024.

The CRA provisions apply across all sectors and all types of consumer contracts - financial services, legal, retail, telecoms, gambling, digital content, and services. Compliance with sector-specific regulation does not replace compliance with the CRA. The FCA's Consumer Duty and the CMA's CRA requirements operate simultaneously.

The five most significant changes in the July 2026 guidance are:

• Direct enforcement without court proceedings: the DMCC Act gives the CMA powers to act against unfair or non-transparent terms immediately, without injunctive action. Penalties up to 10% of global turnover are available for both transparency breaches and fairness failures
• Intelligibility as a distinct transparency requirement: the guidance makes explicit what CJEU case law has required since 2015 - that consumers must be able to understand the practical consequences and economic risks of a term, not just decode its words. Readability alone is legally insufficient
• Structural and navigational requirements: new sections address logical organisation, concept distribution, cross-referencing of related terms, and the risks of key concepts being fragmented across multiple documents or sections
• Prominence requirements with more detail: the guidance provides more precise direction on when terms require active highlighting - and is explicit that making all terms equally prominent is itself a transparency failure that destroys the effect of genuine prominence
• Digital presentation addressed explicitly: layered digital formats, mobile accessibility, FAQs at decision points, and prohibitions on false urgency mechanisms (countdown timers, automatic basket removal) are now directly addressed

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Key concepts: what the guidance requires

These six concepts define the compliance landscape under the updated CMA37. Each is more precisely defined in the July 2026 guidance than in the 2015 version.

The transparency test: why readability is not enough

The transparency requirement is the most operationally significant element of the updated guidance. It is also where most firms are most exposed - because the standard the CMA applies goes substantially beyond what readability testing measures.

What the guidance says

The CMA is explicit on two points that directly challenge the use of readability scores as compliance evidence:

"[L]egibility and clarity of language are not enough to ensure compliance. The transparency test requires that terms are presented and explained in a way that enables the average consumer to understand their rights and obligations, assess how the contract will operate in practice, and make informed choices." - CMA37, para 4.33

"While a term can be grammatically simple and precise, and therefore readable, it may not be comprehensible to a consumer if its practical effects and implications cannot be understood." - CMA37, para 4.34

The guidance gives a specific example: a price variation clause stating "upon reasonable notice" may be grammatically simple, but it fails the transparency test because the consumer cannot understand how much the price may change, how often, or why. The wording is readable. The consequences are not intelligible.

Readability is not intelligibility

When Amplifi assessed the CMA's own draft guidance document using the Cognitive Risk Engine™, it scored 32 out of 100 on the intelligibility scale - likely to be fully understood by around a third of UK adults. This reflects the structural complexity inherent in legal documents. It also demonstrates that a document can be formally transparent (legally drafted) and still fail the intelligibility standard for the average consumer.

For the full legal basis for this distinction - including the CJEU case law on intelligibility and foreseeability that the CMA's guidance is built on - see: Intelligibility vs readability: what regulated firms need to know.

What compliance looks like in practice

Enforcement: what the DMCC Act changes

The CMA's new direct enforcement powers under the DMCC Act 2024 are the most consequential change to the unfair contract terms regime since 2015. The CMA can now act without going to court - making enforcement faster, less predictable for firms, and available against transparency breaches alone, even where a term is not substantively unfair.

• No court required: the CMA can order firms to stop using non-compliant terms directly, without injunctive proceedings
• Penalties up to 10% of global annual turnover or £300,000 (whichever is greater) for terms the CMA considers unfair or in breach of transparency
• Non-transparent terms are not binding on consumers - meaning firms may be required to repay money received under such terms
• Transparency and fairness are separate obligations - a term can breach the transparency requirement and be subject to enforcement even if it is not substantively unfair
• The fairness test is prospective - the CMA can act against terms that could cause harm, not only those that have

‍KEY POINT: A firm that has tested its communications for readability but not intelligibility does not have a defensible compliance position under CMA37. The CMA's transparency test requires evidence that the average consumer can understand the practical consequences of terms - and the direct enforcement powers mean that gap can now be acted on quickly.

Amplifi's four dimensions of intelligibility - mapped to CMA37

Amplifi's Cognitive Risk Engine™ has always assessed linguistic intelligibility. The multi-dimensional risk assessment capability extends this into three new areas that the CMA's updated guidance now directly requires - information structure, visual analytics, and financial maths. Together, the four dimensions provide the first complete intelligibility evidence framework aligned to every dimension of the CMA transparency test.

A communication can be linguistically clear and still fail the CMA's transparency standard if its structure buries key terms, its tables are uninterpretable, or its rate information cannot be applied by the average consumer. The FCA makes the same point in Consumer Duty terms: "The FCA does not distinguish between linguistic and structural failure."

Full product details: amplified.global/multi-dimensional-risk-assessment

Dimension 1: Linguistic intelligibility - CMA rules 4.33–4.40

Amplifi's Cognitive Risk Engine™ goes beyond Flesch-Kincaid metrics to assess conceptual difficulty, jargon density, ambiguity, passive tense, and unsimplified statutory references. It predicts how content will be understood across demographic cohorts - including lower literacy groups, non-native English speakers, and consumers with characteristics of vulnerability - directly implementing the CMA's "average consumer" test.

Automated jargon detection scans legal text for terms such as "indemnity" and "force majeure" - specifically cited in the CMA guidance as requiring plain-language explanation - and provides guided rephrasing suggestions. Every assessment is time-stamped and auditable.

Regulatory mapping: CMA 4.33–4.34 (legibility and clarity insufficient alone), CMA 4.40 (plain and intelligible language requirements), s.68 CRA (transparency obligation), CJEU intelligibility and foreseeability standards.

Dimension 2: Information structure - CMA rules 4.38–4.43 and 5.15–5.16

Information structure analysis directly addresses what the CMA guidance calls the most difficult structural transparency failures - those that arise not from individual unclear words but from how concepts are distributed and connected across a document.

The structural report provides:

• Concept distribution analysis: identifies where key concepts (such as missed payment consequences) are fragmented across multiple sections and pages. Provides concrete evidence of CRA s.68 transparency failure through structural fragmentation - even where individual sentences are readable
• Section organisation metrics: tests whether related terms are logically grouped and signposted together as CMA 4.38–4.39 requires - for example, whether termination fees, refund terms, and outstanding balance calculation are adjacent and cross-referenced
• Structural asymmetry analysis: measures whether trader enforcement powers are given hierarchical priority and prominence while consumer escalation routes (FOS referrals, debt advice signposting) are buried or back-loaded. Directly evidences compliance with CMA 4.30's requirement not to exploit structural asymmetry
• Prominence testing for the s.64 core exemption: identifies where price terms or particularly onerous terms (such as promotional rate loss triggers) are embedded in undifferentiated multi-topic sections, losing the prominence required for the s.64 core exemption - and exposing them to direct fairness challenge

Regulatory mapping: CMA 4.38 (adequate information about mechanics and risks), CMA 4.39 (reason for term and relationship to other terms), CMA 4.43 (logical organisation, headings, cross-referencing), CMA 5.15–5.16 (prominence), CMA 4.30 (structural asymmetry and exploitation of consumer limitations).

Dimension 3: Visual analytics - CMA rules 4.42–4.43

Regulated communications do not communicate through text alone. Fees, rates, repayment schedules, exclusion conditions, and process steps are frequently presented in tables and charts. Current compliance tools do not test whether these visual elements are intelligible - only whether the labels on them are readable.

Amplifi's visual analytics capability assesses whether a consumer can correctly interpret a table or chart - not just decode its labels. A consumer may be able to read every heading in a fee table and still fail to understand what the fees mean for their situation. This is precisely the type of transparency failure the CMA guidance now addresses under its structure and presentation requirements (CMA 4.43).

Regulatory mapping: CMA 4.43 (structure and presentation, legibility requirements), s.68 CRA (legibility obligation), CMA 4.42 (digital presentation and accessibility requirements).

Dimension 4: Financial maths - CMA rule 4.34 and foreseeability standard

The foreseeability requirement - central to both the CJEU case law on intelligibility and the CMA's updated guidance - means that consumers must be able to understand the potentially significant economic consequences of a term. Numerical accuracy is not sufficient. The question the CMA asks is whether the average consumer can move from reading the figure to understanding its consequence.

Financial maths analysis tests whether rates, fees, repayment examples, and cost projections are presented in a form that the average consumer can apply to their own situation. A disclosure that is numerically correct but expressed in a way that prevents the average consumer from understanding what it means for them is a transparency failure under CMA 4.34 and a foreseeability failure under the CRA's intelligibility standard.

Regulatory mapping: CMA 4.34 (practical effects and implications must be understandable), CJEU foreseeability of economic consequences, s.68 CRA, FCA Consumer Duty Consumer Understanding Outcome.

CMA rules mapped to Amplifi capabilities: the full reference table

Use this table to identify which Amplifi capability addresses each specific CMA rule and what evidence it produces. This is the compliance reference document for legal and governance teams preparing their CMA37 response.

Financial services: Consumer Duty and CRA operating in parallel

FCA-regulated firms face a dual compliance obligation. The Consumer Duty and the CRA transparency requirement converge on the same practical demand: firms must demonstrate that their communications are genuinely comprehensible to the consumers who receive them. Neither regulator accepts readability scores as sufficient evidence.

Amplifi's four-dimensional assessment directly bridges both requirements. The same evidence - linguistic intelligibility scores, structural risk reports, visual analytics, and numerical intelligibility - satisfies both the FCA's Consumer Understanding Outcome evidential standard (required for the Consumer Duty board report) and the CMA's transparency requirement under CMA37. Firms in financial services do not need two separate compliance frameworks - they need one framework that covers both.

FCA & CMA

FCA Consumer Duty (Consumer Understanding Outcome): Communications must equip consumers to make effective, timely decisions - tested and evidenced across all dimensions before distribution.

‍CMA CRA transparency requirement: Written terms must be in plain and intelligible language, structurally coherent, and presented so the average consumer can understand their rights, obligations, and practical consequences.Both require multi-dimensional intelligibility evidence. Neither accepts readability scores alone.

Compliance action checklist: what firms should do now

Priority actions following the CMA's July 2026 guidance, organised by team. Standard consumer contracts in financial services, subscription services, digital content, and any sector not reviewed since 2015 should be prioritised.

Conclusion

The CMA's updated guidance raises the compliance standard for consumer communications in four dimensions: the words used, how they are structured, how visual content communicates, and whether numerical content enables consumers to understand the financial consequences of what they are agreeing to. Readability testing addresses only the first - and even then, only partially.

Firms that have relied on readability scores as their primary compliance evidence are now exposed to direct CMA enforcement action. The four-dimensional intelligibility assessment Amplifi provides is the most complete document-level response to the CMA's updated transparency requirements currently available in the UK market. It maps directly to the specific rule paragraphs the CMA has published, produces a time-stamped audit trail, and covers the same evidential requirements the FCA expects for Consumer Duty board reports.

To see how the full assessment works across your document portfolio, visit amplified.global/multi-dimensional-risk-assessment or request a free trial.

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Further reading and sources

CMA37 - Unfair contract terms guidance (July 2026)

Amplifi - Multi-dimensional risk assessment

Amplifi's response to the CMA consultation on draft guidance

Intelligibility vs readability: what the legal distinction means for regulated firms

What is the FCA Consumer Duty? A plain-English guide

How to write a Consumer Duty board report in 2026

AI-generated content and FCA compliance

Amplifi Multi-Level Comprehension Framework (PDF)

Consumer Rights Act 2015

Digital Markets, Competition and Consumers Act 2024

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About Amplifi

Amplifi (Amplified Global Ltd) is a UK-based AI software company whose Cognitive Risk Engine™ assesses intelligibility across four dimensions - linguistic, structural, visual, and numerical - helping regulated firms meet the CMA's transparency requirements and the FCA's Consumer Duty simultaneously. 

Amplifi submitted a formal response to the CMA's consultation on the draft unfair contract terms guidance.

 ISO 27001 certified, FSQS registered, and listed on the FCA AI Marketplace 2025. Visit amplified.global.

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