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High Court rules that thousands of gym contracts are unfair and unenforceable

Tuesday, 31st May 2011

2011-006-gym-shoesOFT: High Court rules that terms in thousands of gym contracts are unfair, following OFT action

The OFT today welcomed a ruling from the High Court that minimum contract length terms and a number of other key terms in thousands of gym membership contracts, recommended and enforced by Ashbourne Management Services Limited ('Ashbourne'), are unfair and hence unenforceable. The court also ruled that a number of Ashbourne's techniques for collecting arrears were unlawful. The judge, Mr Justice Kitchin remarked ‘the minimum period was a trap into which the average consumer was likely to fall.’

Ashbourne was responsible for drawing up membership agreements and collecting payments for 700 gyms in the UK.

The OFT embarked on the court case after receiving many complaints from consumers who claimed they were put under pressure to continue to pay when they tried to cancel their contracts, sometimes through unforeseen circumstances such as unemployment, pregnancy or relocating.

17,000 defaults registered on customers’ credit files

If a customer refused to pay after cancelling their membership then Ashbourne would register a default at the credit reference agencies and by the end of July 2009 these had totalled 17,000. A default makes it virtually impossible for the consumer to obtain future credit, including mortgage, from the main stream lenders.

Not a credit agreement

In his ruling the judge said that the gym contracts were not credit agreements and Ashbourne did not require a consumer credit licence. As such the failure to pay could not be registered as a default on a consumer’s credit file.

The judge ruled that Ashbourne should not report or threaten to report consumers to credit reference agencies, where:

  • The term requiring payment is unfair
  • The sum demanded is not actually owed or is simply a claim for damages
  • The consumer has a genuine reason for disputing their liability to pay.

What to do if you have default notice from Ashbourne

If you have not already done so, ask to see your credit file. You can do this here see my credit file for free or visit one of the other credit reference agencies.

If you have a default registered against you from Ashbourne in these circumstances then write direct to Ashbourne and ask that in light of the High Court ruling they remove the default.

More on how to remove default notices here Default notices and how to remove them.

If Ashbourne refuse to do this or delay in responding then write to the credit reference agency that supplied your file, refer to the High Court ruling and state that as your contract was not a credit agreement then it cannot be registered as a default and that it should be removed forthwith.

Any consumer who feels that they have an unfair minimum contract term they wish to end should contact their gym. 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.



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