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NEWS
Easy cancellations and cooling off periods will be part of new consumer legislation impacting health club memberships
POSTED 11 Mar 2024 . BY Kath Hudson
Legislation on contracts could be here by the spring Credit: Shutterstock/Altrendo Images
The Digital Markets, Competitions and Consumers Bill is closer to becoming law - moves to the House of Lords today
The Competitions and Markets Authority will be given stronger powers to protect consumers
It will make it harder to tie members into contracts, favouring operators with no contacts, such as The Gym Group and PureGym
Cancellation terms will have to be made clear at the outset and regular cooling off periods given
New legislation will change the way health clubs in the UK manage their membership process, creating greater powers for consumers when it comes to contracts and cancellations.

The Digital Markets, Competition and Consumers Bill – designed to clamp down on subscription traps, fake reviews and drip pricing – has been making its way through the parliamentary process and moved to the next stage in the House of Lords today (Monday 11th March), as it progresses towards the statute books.

The bill is expected to receive Royal Assent in the spring and become law thereafter.

The legislation will grant the Competitions and Markets Authority (CMA) stronger powers to tackle businesses that breach consumer rights in a variety of ways. This includes the requirement for them to give clear information to consumers up-front at the point a contract is signed, rather than hiding it in small print. Businesses will also be obliged to make it easier for consumers to get out of contracts.

All key contract information, such as payment and cancellation terms and cooling off periods, must be made available to consumers in one go before checkout completion.

There will also be a mandatory 14-day cooling off period at the start of every contract and – importantly – a further 14-day cooling off period if prices change and at the end of each contract term, with the consumer pro-actively notified and given sufficient notice.

In some cases this will mean that a 14-day cooling off period will need to be given at the end of every year of membership.

Reminder notices must be sent for the first renewal payment and at least every six months thereafter.

Information about cancelling must be given to consumers, including the website or email address for contact and the amount of notice needed. Details about prices and payment dates must also be made transparent.

Consumers must have the ability to show their intention to cancel with one signal, such as switching off auto-renewal or clicking cancel online in a customer dashboard or app. Fundamentally, the legislation will insist that the mechanism for cancelling should be as simple as that which is used for the sign-up.

Any notice periods or leaving fees must be clearly communicated with consumers when entering any contract.

At the moment, some operators insist that consumers both cancel their direct debit and notify them in writing that they intend to leave – often with a penalty notice period in place, meaning the member sometimes need to continue to pay for a period of time once they’ve decided to leave. This practice will no longer be legal.

Another point of the legislation, which is likely to have an impact for the sector, is around drip pricing: where people are drawn to a product for a low price, but during the checkout process, fees or other charges are added, making the final price higher than advertised.

The legislation is not trying to stop contracts specifically, but saying operators must be open and honest and not catch people out with the small print. For example, if there’s a three-month notice period, or a joining fee, this must be made clear at the outset and a record made of the customer accepting and understanding these terms.

Contracts are not popular among consumers and the fitness industry’s history of onerous contacts lingers and causes scepticism with some potential members, doubtless having an impact on market penetration levels.

The Office of Fair Trading demanded better cancellation rights in the sector more than 10 years ago and it has taken this long for the legislation to be drafted and to make its way through the system.

Trends in the industry are going towards flexibility and meeting people where they are. For most, the gym will only account for part of their weekly schedule of physical activity: they might go to multiple providers, do some outside activity and home workouts, so not tying people into contracts gives low-cost operators, such as The Gym Group and Pure Gym, a competitive advantage.

As the sector evolves to support the health and wellness of the nation, looking to ally with the healthcare sector, membership models need to evolve as well. The best way to keep members is to work on retention, ensuring value for money and a positive experience.

Trade body, UK Active, has told HCM it’s been representing the industry’s concerns about elements of the new legislation to government and working with it to understand anticipated impact on the sector.

Director of policy, research and communications at UK Active, Clemency Lion, said: “While we support the government’s push to ensure consumers are properly protected, we want to make sure these new measures don’t place an undue burden on our members.

Once the Bill becomes law, UK Active says it will lobby to get secondary legislation passed, as well as issuing guidance for businesses.

UK Active says it doesn’t expect changes to be enforced before October 2025, giving time for this secondary legislation – the practical measures that enable the law to be enforced – to be completed.

“We continue to work closely with the Department for Business and Trade on ensuring the interests of our members are considered and consulted throughout the legislative process," said Lion.

The changes will have an impact on software, with Perfect Gym''s chief strategy officer, Peter Croft, saying: "With the proposed changes to contract structures in the fitness industry it will be important that operators have a configurable platform that will allow them to meet the new requirements and avoid the costly penalties we saw in the original Office of Fair Trading investigations. In addition to configurability it will also be important to have a user-friendly customer experience, and APIs which will allow operators to 'surface' data and functions in order to build a custom, compliant, user experience.

"Software needs to meet the latest requirements to show the full costs of the membership contract, the commitment periods, cancellation policies, freezes and other key elements that the CMA have included in the proposed changes.

"The consumer experience will also be a really important part of meeting the new requirements, with easy cancellation processes, visibility of the payment schedule, upcoming payments and charges and the ability to amend, cancel, and freeze.

"A modern platform should have all of these capabilities within the system, and also have them available in an API so the business can build its own, fully-compliant, consumer experience if needed.

"The proposed changes will present challenges to some of the legacy providers in the UK who lack flexibility in configuration or comprehensive integration with payment providers," said Croft. "They will face challenges in delivering on flexible contracts, easy cancellation and freeze options and payments transparency. Additionally, many lack comprehensive APIs to allow the operator to build custom experiences.

"To meet the changing requirements of contract structures it will also be important that the operator can initiate mass changes for existing customers to avoid having to manually edit individual contracts one by one," he concluded.

HCM will continue to debate this subject and welcomes your thoughts. Email [email protected].

To find out more about the Bill and receive the latest updates, please email ukactive’s Public Affairs team at: [email protected].
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Jobs    News   Products   Magazine
NEWS
Easy cancellations and cooling off periods will be part of new consumer legislation impacting health club memberships
POSTED 11 Mar 2024 . BY Kath Hudson
Legislation on contracts could be here by the spring Credit: Shutterstock/Altrendo Images
The Digital Markets, Competitions and Consumers Bill is closer to becoming law - moves to the House of Lords today
The Competitions and Markets Authority will be given stronger powers to protect consumers
It will make it harder to tie members into contracts, favouring operators with no contacts, such as The Gym Group and PureGym
Cancellation terms will have to be made clear at the outset and regular cooling off periods given
New legislation will change the way health clubs in the UK manage their membership process, creating greater powers for consumers when it comes to contracts and cancellations.

The Digital Markets, Competition and Consumers Bill – designed to clamp down on subscription traps, fake reviews and drip pricing – has been making its way through the parliamentary process and moved to the next stage in the House of Lords today (Monday 11th March), as it progresses towards the statute books.

The bill is expected to receive Royal Assent in the spring and become law thereafter.

The legislation will grant the Competitions and Markets Authority (CMA) stronger powers to tackle businesses that breach consumer rights in a variety of ways. This includes the requirement for them to give clear information to consumers up-front at the point a contract is signed, rather than hiding it in small print. Businesses will also be obliged to make it easier for consumers to get out of contracts.

All key contract information, such as payment and cancellation terms and cooling off periods, must be made available to consumers in one go before checkout completion.

There will also be a mandatory 14-day cooling off period at the start of every contract and – importantly – a further 14-day cooling off period if prices change and at the end of each contract term, with the consumer pro-actively notified and given sufficient notice.

In some cases this will mean that a 14-day cooling off period will need to be given at the end of every year of membership.

Reminder notices must be sent for the first renewal payment and at least every six months thereafter.

Information about cancelling must be given to consumers, including the website or email address for contact and the amount of notice needed. Details about prices and payment dates must also be made transparent.

Consumers must have the ability to show their intention to cancel with one signal, such as switching off auto-renewal or clicking cancel online in a customer dashboard or app. Fundamentally, the legislation will insist that the mechanism for cancelling should be as simple as that which is used for the sign-up.

Any notice periods or leaving fees must be clearly communicated with consumers when entering any contract.

At the moment, some operators insist that consumers both cancel their direct debit and notify them in writing that they intend to leave – often with a penalty notice period in place, meaning the member sometimes need to continue to pay for a period of time once they’ve decided to leave. This practice will no longer be legal.

Another point of the legislation, which is likely to have an impact for the sector, is around drip pricing: where people are drawn to a product for a low price, but during the checkout process, fees or other charges are added, making the final price higher than advertised.

The legislation is not trying to stop contracts specifically, but saying operators must be open and honest and not catch people out with the small print. For example, if there’s a three-month notice period, or a joining fee, this must be made clear at the outset and a record made of the customer accepting and understanding these terms.

Contracts are not popular among consumers and the fitness industry’s history of onerous contacts lingers and causes scepticism with some potential members, doubtless having an impact on market penetration levels.

The Office of Fair Trading demanded better cancellation rights in the sector more than 10 years ago and it has taken this long for the legislation to be drafted and to make its way through the system.

Trends in the industry are going towards flexibility and meeting people where they are. For most, the gym will only account for part of their weekly schedule of physical activity: they might go to multiple providers, do some outside activity and home workouts, so not tying people into contracts gives low-cost operators, such as The Gym Group and Pure Gym, a competitive advantage.

As the sector evolves to support the health and wellness of the nation, looking to ally with the healthcare sector, membership models need to evolve as well. The best way to keep members is to work on retention, ensuring value for money and a positive experience.

Trade body, UK Active, has told HCM it’s been representing the industry’s concerns about elements of the new legislation to government and working with it to understand anticipated impact on the sector.

Director of policy, research and communications at UK Active, Clemency Lion, said: “While we support the government’s push to ensure consumers are properly protected, we want to make sure these new measures don’t place an undue burden on our members.

Once the Bill becomes law, UK Active says it will lobby to get secondary legislation passed, as well as issuing guidance for businesses.

UK Active says it doesn’t expect changes to be enforced before October 2025, giving time for this secondary legislation – the practical measures that enable the law to be enforced – to be completed.

“We continue to work closely with the Department for Business and Trade on ensuring the interests of our members are considered and consulted throughout the legislative process," said Lion.

The changes will have an impact on software, with Perfect Gym''s chief strategy officer, Peter Croft, saying: "With the proposed changes to contract structures in the fitness industry it will be important that operators have a configurable platform that will allow them to meet the new requirements and avoid the costly penalties we saw in the original Office of Fair Trading investigations. In addition to configurability it will also be important to have a user-friendly customer experience, and APIs which will allow operators to 'surface' data and functions in order to build a custom, compliant, user experience.

"Software needs to meet the latest requirements to show the full costs of the membership contract, the commitment periods, cancellation policies, freezes and other key elements that the CMA have included in the proposed changes.

"The consumer experience will also be a really important part of meeting the new requirements, with easy cancellation processes, visibility of the payment schedule, upcoming payments and charges and the ability to amend, cancel, and freeze.

"A modern platform should have all of these capabilities within the system, and also have them available in an API so the business can build its own, fully-compliant, consumer experience if needed.

"The proposed changes will present challenges to some of the legacy providers in the UK who lack flexibility in configuration or comprehensive integration with payment providers," said Croft. "They will face challenges in delivering on flexible contracts, easy cancellation and freeze options and payments transparency. Additionally, many lack comprehensive APIs to allow the operator to build custom experiences.

"To meet the changing requirements of contract structures it will also be important that the operator can initiate mass changes for existing customers to avoid having to manually edit individual contracts one by one," he concluded.

HCM will continue to debate this subject and welcomes your thoughts. Email [email protected].

To find out more about the Bill and receive the latest updates, please email ukactive’s Public Affairs team at: [email protected].
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+ More catalogues  

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ADVERTISE . CONTACT US

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Tel: +44 (0)1462 431385

©Cybertrek 2024

ABOUT LEISURE MEDIA
LEISURE MEDIA MAGAZINES
LEISURE MEDIA HANDBOOKS
LEISURE MEDIA WEBSITES
LEISURE MEDIA PRODUCT SEARCH
PRINT SUBSCRIPTIONS
FREE DIGITAL SUBSCRIPTIONS