Health and fitness clubs: unfair contract terms
Office of Fair Trading (OFT) closed consumer enforcement case.
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 collection practices.
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 Limited (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 commercial practices.
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 contracts.
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.
- See changes and undertakings (pdf 135kb)
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.
- See the changes and undertakings (pdf 143kb)
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.
- Press release OFT secures further improvements to gyms contracts (10 September 2013)
- Press release Three gyms improve contract terms following OFT action (8 March 2013)
- Investigation into Asbourne Management Services
- Press release: OFT secures High Court order to stop unfair gym contract terms (19 August 2011)
The OFT cannot provide advice or assistance to individual consumers or businesses.
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 join? 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: www.tradingstandards.gov.uk/advice/index.cfm.
The OFT's Unfair Terms Hub provides 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 considering UTCCRs.