§ MR. C. DUNCAN (Barrow-in-Furness)I beg to ask the President of the Board of Trade whether, in view of the fact that thousands of people have been deprived of their whole savings by such companies as the Provincial Homes Investment Company, he will take immediate steps to have such companies wound up and the promoters prosecuted.
§ MR. CHURCHILLCompanies registered under the Companies Acts can only be wound up in the manner provided by those Acts, and the Board of Trade have no power to take any steps to obtain or order a winding up. Nor is it within the province of the Board of Trade, except in the case of companies ordered by the Court to be wound up compulsorily to take steps for the prosecution of the promoters. If my hon. friend has facts in his possession disclosing a criminal offence it is in his power to submit them to the Director of Public Prosecutions. 78 I may add that, for the protection of the poorer and less instructed classes of investor, Is caused a Memorandum to be issued last week drawing their attention to certain definite points which require careful consideration before entering into a contract with a company doing house purchase business. I am having this Memorandum printed with the Votes:—Investment Companies and House Purchase Companies.—Memorandum by the Board of Trade.—The Board of Trade have recently received many complaints from persons who have invested their savings in bond investment or house purchase companies, and, as it appears that there is often a misunderstanding on the part of subscribers as to the terms on which subscriptions are paid to such companies, the Board desire to draw the attention of persons who think of investing their money with any company of this class to certain matters which should be understood clearly before any contract is entered into. Inquiries made by the Board of Trade show that the usual course followed by a company of this class is to offer bonds or certificates for subscription and to contract to pay the subscriber a lump sum at the end of a period of ten, twenty, or thirty years in return for monthly subscriptions of a fixed amount payable by the subscriber. In some cases the subscriber has, in addition, after the subscriptions have been made for a short period, the right to an advance from the company up to the nominal amount of the bond or certificate for the purpose of buying a house, subject, however, to the condition that the advance will in no case exceed the value of the house. The bonds or certificates issued by investment and house purchase companies always contain a penalty for failure to keep up the subscriptions, and, in many cases, this penalty is the absolute forfeiture of all moneys paid by the subscriber. The complaints laid before the Board of Trade fall generally under one or other of the following heads: (1) Before the end of the period the subscriber wishes to draw out what he has already paid, but finds that the terms of the contract do not allow him to do so; (2) The subscriber for some reason cannot continue his payments, and finds that the whole or part of what he has already paid is liable to be forfeited 79 to the company if future payments are not kept up; (3) The subscriber enters into a contract to purchase a house and thinks that he is thereupon entitled to an advance from the company up to the face value of his bond or certificate, but finds that the company's surveyor places a lower value on the house than the price agreed to be paid, and he is consequently unable to complete his purchase. The Hoard of Trade therefore deem it important to advise that, before entering into any contract with an investment or house purchase company, intending subscribers should find out exactly the conditions as to the withdrawal of payments before the end of the period for which the payments are to be made and as to the risk of forfeiture. They further recommend that persons who are thinking of entering into such a contract with the object of purchasing a house should also find out exactly how the value of the house is to be ascertained, and on what terms the advance will be made under the terms of the contract—28th November, 1908.
§ MR. C. DUNCANI beg to ask the President of the Board of Trade whether he will supplement the warning issued recently regarding house purchase by ordering a thorough investigation by an independent firm of chartered accountants into the methods of the Provincial Homes Investment Company, against whom there are now some hundreds of cases down for hearing in the Law Courts; whether he is aware that a firm of chartered accountants gave up the audit of this company because the directors were borrowing money from the funds without giving security; and whether he will order the company to be wound up in order to prevent further loss to the people who have invested in it.
§ MR. CHURCHILLThe Board of Trade has no power to conduct an inquiry into the affairs of a company except in the case of a company which is in compulsory liquidation. The Board have, however, power to appoint inspectors to examine into the affairs of a company upon the application of members holding not less than one-tenth of the whole of the shares of the company for the time being issued. No such application 80 has been made to the Board of Trade in the case of the Provincial Homes Investment Company, and, consequently, the power to appoint inspectors has not arisen. I have no knowledge of the resignation of the auditors of the company, and have no power to order the company to be wound up.