It is expected that Kwasi Kwarteng, business secretary, will announce the proposals next week to strengthen the CMA’s powers post-Brexit.

The changes will allow the CMA to fine companies directly for breaches of consumer law without going to court.

The reforms follow calls by the former CMA chair Lord Andrew Tyrie for enhanced powers to protect consumers and allow for more efficient enforcement against companies.

Under the new proposals, the CMA will be able to fine companies that breach consumer law as well as those that rip off its customers with misleading claims, unfair terms and conditions, or restrictive contacts.

The fines could be as much as 10% of the company’s global turnover.

Companies will be offered the opportunity to make binding, voluntary commitments at any stage of the CMA’s investigations to speed up the process and lower costs.

Lord Andrew Tyrie said that “radical reform of consumer protection in the UK is long overdue”. He welcomed the proposals as marking what “could be a big step in the right direction” but added that the devil was in the detail.

The new changes also plan on protecting smaller, newer companies from “killer acquisitions”, where a large company takes over a rival before it can launch a new service or product.

Any company that fails to comply with CMA investigations may face fines of up to 5% of annual turnover and additional daily penalties of up to 5% of daily turnover while non-compliance continues.

A government official said: “We want a modernised competition watchdog that sets a gold standard worldwide. That means new sanctioning powers and faster processes to protect consumers and help small businesses thrive.”