Relief as government closes loophole that would allow visitors to ‘abuse’ membership schemes

Sector bodies have welcomed the news that charitable, cultural and heritage organisations will be excluded from forthcoming legislation that aims to protect consumers from unwanted subscriptions – but would have opened up a loophole enabling visitors to abuse museum membership schemes.

The UK-wide Digital Markets, Competition and Consumers Act, which will come into force next spring, includes a new 14-day cooling off period after a free or discounted trial ends or when a contract renews for 12 months or longer.

While the rules are intended to crack down on “rip-off services” that offer consumers free or discounted trials before automatically converting them into full-price subscriptions, heritage leaders have previously expressed concerns they would negatively impact income generation.

The concern centred on the potential for people to purchase annual memberships, access charging exhibitions and sites for free before seeking a refund.

In response to consultation around the new rules, the government has confirmed that memberships offered by charitable, cultural and heritage organisations will be excluded from the new rules “given the unique role they have in preserving and opening up access to the nation’s history, landscapes, and cultural collections”.

Gift Aid rules do not allow Gift Aid to be claimed on payments subject to refunds, but the government has made it that the new rules will not prohibit Gift Aid claims.

Sector responds

Sharon Heal, director of the Museums Association, said: “Many museums run membership schemes that build support and give access to arts and culture as well as providing valuable income streams for organisations. We welcome the government’s decision to exclude such schemes from further regulation.”

The National Trust also welcomed the news as “a huge relief”.

“The government has recognised the significant contribution that membership charities like the National Trust make to civil society and rightly excluded them from these reforms, which could have cost organisations like ours millions of pounds and hampered our ability to provide public benefit,” said Hilary McGrady, the trust’s director-general.

“We now hope the government extends this approach to all charities, other non-profit organisations and to those in the wider visitor economy.”

Speaking in her role as chair of the National Museum Directors Council, Laura Pye said: “We are delighted to hear that museum membership schemes will be exempt from the new rules, which will ensure that this essential source of income for all types of museums is protected and can continue to grow.

“We are extremely grateful to ministers and officials from Department for Business and Trade and the Department for Culture, Media and Sport for listening to sector concerns, and to colleagues across museums and the wider charitable sector for working together so successfully to make the collective case for our vitally important work.”

The Art Fund said its National Art Pass would also be protected from the new regulation. “This is a positive step which will safeguard [charitable organisations'] sustainability and ensure the UK's cultural and heritage charities can continue to deliver exceptional public benefit for audiences nationwide,” it said in a statement.

Why have charitable, cultural and heritage organisations been excluded from the new legislation?

“Cultural and heritage charities provide services that enrich the fabric of our communities and culture. We recognise the value and impact of these activities in both our economic and social landscape. However, we are also committed to ensuring that consumers are given a fair opportunity to manage what they pay for through subscriptions.

“Cultural and heritage charities raised concerns about how the new subscription rules would apply to their memberships (for example, for free or reduced-price entry to museums, galleries, heritage sites, performances). They were particularly worried that consumers could abuse the initial cooling-off period by visiting multiple properties or sold-out exhibitions in the first two weeks of a subscription membership, then cancelling and getting almost all their membership fee back.

“They were also concerned that complying with refund requirements would prevent them from claiming Gift Aid, as the Gift Aid rules do not allow Gift Aid to be claimed on payments subject to refunds. In addition, they argued that the cost of compliance would impact their ability to deliver activities for public benefit.

“The government appreciates the valuable work done by cultural and heritage charities to protect and provide access to the nation’s culture, landscapes, collections, and historical places. We are committed to maintaining existing consumer protections but also recognise the public benefit delivered by cultural and heritage organisations that protect and provide access to unique collections, places and experiences.

“Therefore, we will remove certain charitable memberships from the new subscription regime so that they are not subject to additional consumer protection regulations beyond those that already currently apply.

“We will legislate to exclude charitable memberships from the DMCCA. Broadly, this will exclude contracts which are between a charity and a consumer and that allow consumers to attend performances, see collections, or visit places (for example, museums, galleries, historical properties, landscapes, wildlife, performing arts) which are related to their charitable purpose.

“This will mean that such memberships are not subject to additional regulation under the subscription regime.

“The government understands the critical role that Gift Aid income provides for charitable organisations. We have made clear in the Gift Aid guidance that compliance with consumer law does not prohibit Gift Aid claims.”

Taken from the government response to consultation on the implementation of the new subscription contracts regime