The Office of Fair Trading (OFT) has issued high court proceedings against Ashbourne Management Services Limited (Ashbourne), a company that administers three-year gym contracts. The core issue seems not to be the actual principle of long-term gym contracts, but a lack of transparency over cancellation terms and making consumers aware of the total cost over the 36-month term.
The monthly cost of these three-year memberships is relatively low at around £16 per month, but can prove very ‘expensive’ if a consumer attempts to cancel during the minimum term. Expensive because where consumers cancel mid-term, Ashbourne initiates collection procedures that can end in a default being registered with UK credit reference agencies. As of July 2009, Ashbourne had registered approximately 17,000 defaults with credit reference agencies (OFT source). A default makes all forms of future consumer credit more expensive.
Jason Freeman, Legal Director in the OFT’s Consumer Group, said:
‘It is important that consumers are able to understand the nature and extent of their liabilities before entering into contracts. The Consumer Credit Act sets out rules to ensure this, and we expect traders offering credit to comply with these.
‘Likewise, traders should not use unfair contracts or misleading or aggressive practices in order to put pressure on consumers to pay money that the trader may not otherwise be entitled to.
We have concerns about Ashbourne’s practices, but as the company disputes our interpretation of the law we have asked the High Court to rule on this.’
What does the UK media make of this story?
I had a quick look around the web and saw that the Daily Mirror had picked up on the story. What they say matters because their website is in the UK top 200 (based on visitor numbers). The story had already attracted comments from several gym members whose 3-year contracts were being administered by Ashbourne.
What do you think about 3-year gym contracts?
Gym contracts really do polarise opinion in the UK. Some brands love them, while many of the new low-cost brands such as Pure Gym and The Gym Group have abandoned them entirely. What do you think? Please leave a comment below.
Tags: gym contracts