OFT secures High Court order to stop unfair gym contract terms

92/11 19 August 2011

The OFT is urging gyms to check their contract terms to make sure they are lawful and check whether they need to notify their customers of any changes, after the High Court ordered a gym management company not to use certain unfair terms and business practices.

The OFT's case against Ashbourne Management Services Limited ('Ashbourne') was launched following a large number of complaints to it and to local trading standards services from consumers who had entered into lengthy memberships which they were not able to cancel.

An enforcement order against Ashbourne and its directors has now been granted in the High Court. This sets out what Ashbourne may no longer do or say to consumers, further to a High Court judgment handed down on 27 May 2011.

As part of the Court's requirements under the order, Ashbourne has this week written to over 700 gym clubs it acts for to inform them of the judgment and their responsibilities to comply with it.

The Court had ruled that Ashbourne's minimum contract length terms in some of their standard contracts and a number of other key terms in thousands of gym membership contracts were unfair and therefore unenforceable. The Court also found that a number of Ashbourne's techniques for collecting the arrears of consumers who had stopped making payments were unlawful, including its practice of reporting the arrears to credit reference agencies. The use of these practices has now been prohibited under the order.

Cavendish Elithorn, Senior Director of the OFT Goods and Consumer Group, said:

'We are pleased that the enforcement order has been granted by the High Court, and urge gyms that use similar contracts that they should review their customer contracts for fairness. This judgment and order make clear that businesses cannot hide behind contract terms to engage in intrinsically unfair commercial practices.

'Gym companies should also be aware that trying to enforce illegal contract terms is a breach of the law and in certain circumstances they may have a duty to notify customers where their contract terms have been found to be illegal.

'This case sends a clear signal to traders that the OFT and local trading standards services will not hesitate to take action to protect consumers.

'Any consumer who feels that they have an unfair minimum term and wishes to end their contract should now feel able to challenge the terms with their gym.'

The OFT is unable to provide advice or resolve individual complaints for consumers. General consumer information is available from www.direct.gov.uk/consumer or by calling Consumer Direct on 08454 04 05 06. For further assistance consumers should consider obtaining independent legal advice.

NOTES

A list of the contracts found to be unfair, a copy of the enforcement order and a Q&A is available on the Investigation into Ashbourne Management Services case page.
The OFT issued proceedings against Ashbourne Management Services Limited and its directors John Clayton-Wright and Dawne Clayton-Wright on 2 March 2010.
The trial was held before Mr Justice Kitchin in the High Court in Birmingham from 8-11 March 2011. Following judgment on 27 May 2011, a further hearing was heard on 24 June 2011 and the order was sealed by the Court on 12 August 2011.
Ashbourne has controlled approximately 300,000 contracts with consumers.

Back to: Press releases

Navigate the OFT website:

News and updates

What was new in...

Feedback

Press releases 2011 -