Case reference: MP - G & C/0004
Complainant: OFT own-initiative investigation
Follow-up action to the High Court enforcement order the OFT obtained
against a gym management company in August 2011. The OFT had concerns
that other companies which operate in the health and fitness sector may
be using similar unfair contract terms or business practices, namely
tying consumers into minimum membership periods with limited rights to
cancel should their circumstances change and/or using misleading debt
The Enterprise Act 2002 ('EA02'); the Unfair Terms in Consumer
Contracts Regulations 1999 ('UTCCRs'); and the Consumer Protection
from Unfair Trading Regulations 2008 ('CPRs').
Summary of work
In August 2011, the OFT secured an enforcement order from the High
Court, which prevents Ashbourne Management Services
(AMS), a gym management company, and its directors from recommending,
using or relying on certain unfair contract terms and prohibits a number
of its former debt collection practices which amounted to unfair
Following the Ashbourne ruling, the OFT put all gyms on notice that they
should check their contract terms to ensure that they were compliant.
In January 2012, the OFT opened an investigation into health and fitness
club membership contracts. The investigation focused on several
companies which operate health and fitness club chains, or provide
management services to health and fitness clubs. The OFT considered
whether these companies had been using or recommending unfair contract
terms in breach of the UTCCRs and/or engaging in unfair business
practices under the CPRs, particularly in light of the Ashbourne ruling.
The OFT expects businesses in this sector using terms similar to those
that have been considered to be unfair to amend their contracts
accordingly, and to refrain from enforcing unfair terms in existing
The OFT closed its investigations into Dave Whelan Sports Limited, LA
Leisure Limited and Harlands Group Limited (and associated companies).
Dave Whelan Sports Limited and Harlands Group Limited have worked
constructively with the OFT to make improvements to their terms and
conditions, associated documents and sales processes and have signed
undertakings to address the OFT's concerns.
LA Leisure Limited has also worked constructively with the OFT and has
signed undertakings which address most of OFT's concerns. However, OFT
has reserved its position on LA Leisure Limited's continued use of
contracts with minimum terms in excess of 12 months.
The OFT has written to a number of other operators in the sector to draw
their attention to the types of contract terms and practices that may be
considered unfair and to recommend that they review and amend their
contracts if necessary to ensure terms and business practices considered
to be unfair are not being used.
This action marks the conclusion of the OFT's investigation into health
and fitness club membership contracts.
Although the OFT has now closed its formal investigation, it will
monitor future conduct, keeping the sector under review to ensure
compliance with the undertakings and relevant legislation.
The OFT closed its investigations into Bannatyne's Fitness Limited,
David Lloyd Leisure Limited and Fitness First Clubs Limited. These
companies have worked constructively with the OFT to make improvements
to their terms and conditions, associated documents and sales processes
and have signed undertakings to address the OFT's concerns.
The OFT closed its investigation into Virgin Active Limited. During its
investigation the OFT did not find any evidence that Virgin Active was
using contract terms or business practices found to be unfair by the
High Court in the AMS case. The OFT worked with Virgin Active to make
some changes to its terms and conditions. Virgin Active extended the
period during which members who were made redundant could give notice to
end their membership from one month to two months, and extended the
ability to cancel membership following loss of employment to those who
lost their job in circumstances other than redundancy. Virgin Active
also agreed to reduce the notice period for members on legacy Esporta
24-month contracts from three months to one month. Virgin Active also
made some revisions to the standard debt collection letters that third
parties acting on its behalf used. Virgin Active fully co-operated with
the OFT's investigation.
The OFT cannot provide advice or assistance to individual consumers or
Consumers: If a consumer thinks any of the terms in their gym
membership contract are unfair they should contact Citizens Advice
consumer service in the first instance on 08454 040506 or via its
website: www.citizensadvice.org.uk. The OFT's consumer guide Are they fit to
provides consumers with some general information on their rights when
entering a gym membership contract.
Businesses: If a business wishes to check the fairness of its
contract terms it should consider seeking independent legal advice or
contacting its local authority Trading Standards Service:
The OFT's Unfair Terms
guidance for businesses on the UTCCRs and includes practical tips on how
to review/draft contract terms. This is not a replacement for legal
advice, but is intended for businesses to use as a starting point when