Gym membership terms to change after OFT investigation
Bannatyne Fitness, David Lloyd Leisure and Fitness First clubs are to rewrite their membership terms following an investigation by the Office of Fair Trading.
The OFT launched its investigation after a High Court ruling against a gym management company found lengthy membership periods could be unfair when they locked people in without adequate cancellation rights if their circumstances changed.
It said all three companies co-operated with the investigation and had given undertakings that they would no longer use contract terms or practices considered unfair by the OFT.
Under the agreement, the OFT said it had secured extended rights for members to cancel their contracts early if their circumstances changed in a way that made attending the gym difficult or unaffordable.
The companies have also agreed to stop describing membership as being of a fixed duration if the contract automatically continues on a rolling basis after the initial period expires.
They will also have to provide greater transparency about key membership features, including initial membership periods and cancellation rights, with these to be provided up front as part of the sales process.
Know your rights
OFT spokesman Cavendish Elithorn said: “Millions of people are members of gyms and a membership contract can easily be a financial commitment of over £500 per annum.
“We were concerned that contracts could unfairly lock people in if their circumstances changed, forcing them to continue paying even if they had lost their job.
“We welcome these changes from Bannatyne’s, David Lloyd and Fitness First. As well as making contract terms clearer, the revised contracts also grant members, and prospective members, more flexibility.
“Meanwhile, we are continuing our investigation into some other companies in the sector and will provide an update in the coming weeks.”
The OFT has published online advice for consumers on what to consider before joining a gym.
Thousands of debtors
The court case that triggered the OFT investigation involved a company called Ashbourne Management Services, which drew up membership agreements and collected payments.
The judge in the trial, Mr Justice Kitchin, ruled that the company’s business model “is designed and calculated to take advantage of the naivety and inexperience of the average consumer using gym clubs and the lower end of the market”.
By July 2009 the company had registered nearly 17,000 defaults with credit reference agencies.
Following the trial, the Director of the OFT Goods and Consumer Group, Jason Freeman, said “Unfair terms that unreasonably bind consumers into long contracts they cannot leave, and heavy-handed collection techniques, have no place in businesses dealings wtih consumers.”
