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.

Ashbourne draws up membership agreements, and then collects members' payments, for over 700 gym clubs. In many cases consumers found that they stopped using the gym after a few months, or their circumstances changed so that continued membership was no longer affordable or practical. However the contracts had minimum membership periods of between one and three years and Ashbourne routinely stated consumers could not terminate their membership. If consumers stopped paying Ashbourne demanded immediate payment of the full sum - often many hundreds of pounds - for the whole minimum period.

If the consumer still refused to pay Ashbourne put pressure on them by threatening to damage their credit rating by referring the debt to a credit reference agency. As of July 2009, Ashbourne had registered nearly 17,000 defaults with credit reference agencies.
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Importantly the judge also 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.
As a result of this ruling, the High Court has said that it will make an enforcement order against Ashbourne and its directors, granting injunctions preventing them from using or relying on their current standard contracts and from using unfair terms in the future. This will provide further clarification that Ashbourne cannot enforce the unfair terms in its contracts against those consumers who are disputing them, or indeed against other gym members who have signed up to them.

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