§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Ifor Davies.]
§ 10.1 p.m.
§ Mr. Norman Dodds (Erith and Crayford)
This House is indeed a House of contrasts. Less than an hour ago we were debating the Prayer Book, and now I am opening a debate on an organisation that I described on 17th December as being:… as crooked and callous as human beings can devise."—[OFFICIAL REPORT, 17th December, 1964; Vol. 704, c. 550.]The case of Universal Health Studios, Ltd., can prove beyond any doubt that truth is stranger than fiction.
On Friday last, my hon. Friend the Minister of State, Board of Trade told my hon. Friend the Member for Swindon (Mr. Francis Noel-Baker) that he regretted that he had not yet had a chance to explain in detail his Department's views about Universal Health Studios, Ltd. I should have liked to have had more time this evening, but I have agreed to give my hon. Friend the last 15 minutes, whatever else happens, so that we can have his awaited statement.
On Friday last, my hon. Friend said that if an organisation is using advertising to mislead customs it does not last very long, but he will admit that there are exceptions to every rule. This organisation is an exception, because it has been in existence for some years, and on 14th February, the News of the World reported that the chairman of the firm said that they had 130,000 members; that last year was a particularly successful year, with 50,000 new members, and that January of this year was a record month in that 5,000 new members had been enrolled. My hon. Friend has to approach this now, because the firm's advertising is wrong in every single detail, and is so misleading our people that, unless we do something, and do it very quickly, we cannot talk of consumer protection.
I give another warning. The Americans have an organisation called the United States Federal Trade Commission, whose job it is to protect con- 350 sumers against false or deceptive advertising or commercial practices. It has run out many crooks, who cannot continue there, and our trouble is that those people are coming into this country. I now refer only to this one organisation, Universal Health Studios, Ltd., but I hope to be back in business very soon with a long list of others who are fleecing the public to which we seek to give some protection.
I am very pleased to find that a very responsible body, the Consumer Council, has come out in this matter, and I would quote the following:The Consumer Council has copies of the contracts issued by Universal Health Studios, and also of the notes issue to Managers, as well as the 'Standard Sales Procedure' which must be used when selling the facilities of the club to prospective clients.The notes to Managers stress that the telephone number of the head office is 'ex-directory' and is not under any circumstances to be divulged to any member of the studio.'The contract is a very one-sided affair. The club is not responsible for any damages arising from personal injuries or damage caused whether in using the facilities or equipment.'This document I have goes on—and this shows how one-sided the contract is:There is no health check.It is well worth noting that in the News of the World, the chairman, when asked:Why didn't he have people medically examined before they were enrolled?replied:We see no need. If they can walk up the flights of stairs to our clubs, they can do our exercises.One knows full well that there are people with thrombosis and heart trouble. There are people who have become injured through being in these clubs, without having had any extra expert tuition or guidance. This is a very serious matter.
The Consumer Council goes on to say this:The facilities offered by health clubs may be appreciated by many consumers, but the high pressure sales methods used to persuade people to sign a contract binding them to an expenditure of £50 on undefined facilities are deplorable. The contract itself is a one-sided document that does not specify the facilities being offered, contracts out of all obligations for safety, and is clearly designed not to record an agreement between seller and client, but to protect the seller and to diminish the client's 351 rights in law. It is an example of the type of printed contract the Consumer Council most deplores.I know that my hon. Friend has been discussing this contract with the Universal Health Studios people. I know that he has done his best. Perhaps tonight he will tell us just what has happened in this connection.
I have here over 500 letters, an absolute trail of misery of people who have been persuaded by false advertising to get into the place. Then, as my hon. Friend knows full well, they are not allowed out until they sign a document. The evidence is all here. My concern is not only about those whom we might call the consumers. I am concerned also about the staff. Staff are being inveigled into this by false advertisements and are being put into a very difficult position.
I shall now read a letter which I think is typical. Droves of the staff have come along to me after they have had arguments and have told me just what is happening. The letter reads:Thank you for your letter of the 22nd December. Since returning to Birmingham I have discovered that the wife of a friend of mine was recently coerced into joining the Universal Health Studios because she was desperate to get out of their office to go and meet her children from school. Now she has a bill for £49 10s. …I had two weeks' 'training' in the Oxford Street branch, then sent as an assistant with another trainee (who was to be manager) to Bournemouth. When we got there we had very little ready cash—and kept short for over a week. We had to live on my bank account. We took a flat. I paid the first two weeks and … was to pay the next two weeks. Mr. X nearly got me horribly involved in a fraud over a car and while driving it gave my name to the police when stopped by police for a motoring offence in London. It was not until Bowman-Shaw questioned me in Birmingham about two weeks later that I discovered that so-and-so was just out of prison.In case after case people are taken into this organisation who have been in prison. There is no sort of respectability about the people who are inveigled into this place to work.
My correspondent continues:He actually left U.H.S. employment after about two weeks and a new manager was sent from Birmingham. He arrived on a pay day with only 15s. in his pocket so … I fed and housed him …I have related all this because I think it may help you to understand the pressures which are brought to bear on a salesman for 352 U.H.S. You probably know that they work from 10 a.m. to 10 p.m. with only a 30 minute lunch break, that they are liable to be 'fined' for every minute they are late.The organisation has a rule that for every minute late over the 30 minutes employees are fined 2s. a minute and they are fined 1s. for every minute they are late after 10 o'clock in the morning.
My correspondent continues:… lunch is the only time in working hours a manager is allowed out of the building and … the 'Big Brother' act is kept up both by 'phone. … If you do not earn about £20 they won't keep you and you would be landed in a strange town with no money and the probability of a week or so before getting another job—so you make sure you do not get sacked. But you cannot get another job as you cannot get to an interview, so the only thing to do if you want to leave is to work very hard so that you can save enough money to last a week or so. You sign up, somehow, every possible person who comes into your office. In theory your pay cheque should be big but in practice some of your contracts are classed ' C 100' which means you do not get any commission on them.What happens? Desperation makes you even more determined and even more contracts result from your sales talks, having used more and more dubious means to achieve them. The salesmen, I am certain, suffer as much as the 'members' at the hands of the Bowman-Shaws. I would be interested to know how many have been pushed into actions which have resulted in them going to prison. I myself never received my final cheque for commission.I should have liked to have read more from these people who work in the business, but this gives us some idea of what is happening. All sorts of people write about this. I have 500 letters now and they are coming in by every post. Here is one from the Bishop of Portsmouth:I was more than grateful to get your letter, for I have been longing for someone to have a go at the Universal Health Studios Limited and perhaps the best thing I can do is to enclose the correspondence I have had with them.The Rev. A. C. Adcock of Oxford mentions how a young Nigerian girl was inveigled into this organisation and how she was sent all sorts of notices, threatening her with all kinds of penalties, until she broke down in health as a consequence.
One can go into this business and it does not matter how many doctors' certificates one gets from one's own doctor those who run it have no heart at all. One man paid £50. He died before he could get to the place. His widow, who 353 was pretty hard up, tried for months to get the money back. In the end she was grousingly paid £13 10s. out of the £50. There are people who have paid and cannot get any of their money back.
Hundreds of people have been brought to court. This organisation brings them to court in batches of 12. Here is an extract from a communication from a responsible man:I telephoned Mr. Bray to discuss Universal Health Clubs. Mr. Bray is the solicitor instructed by that firm for their County Court work; this is largely the business of putting into the County Court those people who decline to pay under their contracts. … He has recently lad an increasing number of cases from Universal Health Clubs Ltd. The standard of evidence produced by this company is very poor. For example, the only witness turns out to be the Area Manager, who has no knowledge of the individual account. Recently the County Court judge has insisted on clear evidence of contract. In fact, last week matters got to such a point that the judge said in open court that no further cases were to be put in the list until Mr. Bray was satisfied that they could be properly presented. … Mr. Bray is uneasy about the unfavourable comment that is made against his client and says with truth that he does not wish to become associated with it. He is shortly to see Mr. Bowman-Shaw who runs Universal Health Clubs Ltd. with a view to saying that the business is a crooked one.This communication is from a highly responsible man.
Last week there were 12 cases at the Westminster court. They were not proceeded with because nobody put in an appearance for the company. People turned up but nobody told them that the cases would not be taken. I have in my possession a copy of the contract. I hope that my hon. Friend the Minister of State, Board of Trade, will say something about it tonight. The book which is issued to the staff, which I should have liked to have had time to read tonight, is the most fantastic document that anybody could present to the House. This is the American method gone mad, and the public need to be protected from it.
I am pleased to say that the Code of Advertising Practice Committee has written to me in these words:I think you would like to know that the Voluntary Control Organisation has suspended the advertising of the Universal Health Studios Ltd. until further notice and while investigations are being made. The Code of Advertising Practice Committee has taken this action in view of the public criticism of the sales methods employed by this organisation …".354 This is a voluntary organisation. I have already heard of two newspapers which have refused to accept that situation and therefore, when one recalls that my hon. Friend spoke about legislation some time ago, I think that we should be pressing on the Government to put that legislation nearer the top of their priorities in order to protect the people.
The advertisements which were appearing in the papers in January—the country is being flooded with them—are absolutely misleading. I have the impression that the company will get the maximum number of people into its studios and then, when it has got the maximum amount of money, there is the likelihood that it will do a "moonlight flit". Mr. Bowman-Shaw has said that, despite the pressure on him and the ban on advertising, he is overcoming the difficulty by spending £45,000 on 6½ million brochures to be put through the door in the next four months.
This is a most pressing matter. I hope that, on another occasion, I shall have an opportunity to read out the detailed instructions which are given to every manager and to which he must conform absolutely to the letter. For instance, it is said:The reason that we insist that Company Procedure is followed so carefully is quite simple. We know from 12 years of experience how to sell Memberships to Universal Health Clubs. You do not know. Until a better way is devised our methods will be followed to the absolute letter. … We wish you to understand that we employ 'Shoppers' as we call them—that is, snoopers—to come round and give reports on your Sales Pitch not to spy but rather to make sure that each individual Salesman and Manager is in 'tip-top' form every hour of the day, every day of the week. A 'missed' sale is always a £1 out of your pocket and more out of the Company's pocket.Not only the people who go into the studios but the managers and staff who sign on to work in the business are like flies going into a spider's web. Not one of them is anything but miserable or sullied by this sort of thing which should be run out of the country as it has been run out of America.
§ 10.16 p.m.
§ The Minister of State, Board of Trade (Mr. George Darling)
I am grateful to my hon. Friend the Member for Erith and Crayford (Mr. Dodds) for giving me 355 this opportunity to explain what the Board of Trade thinks about the sales methods of Universal Health Studios and to explain also why we have not been able to take the action which I know hon. Members on both sides would have wanted us to take against the practices which my hon. Friend has described. I apologise to those of my hon. Friends who would have liked to take part and support my hon. Friend the Member for Erith and Crayford, but even now, in the time available, I shall not be able to cover all the ground I should like to cover.
I shall not go over the ground which has been dealt with by my hon. Friend. He has described and rightly condemned this company's sales practices. Its so-called sales manual, which I, too, have read with care, is, in my opinion, a deplorable document. I am sure that no reputable company in this country would instruct its employees deliberately to hustle potential customers into signing agreements and documents in this way. It may be true that the company has many satisfied customers, as was said in the interview reported in the News of the World quoted by my hon. Friend. I do not know how many there are, but what I do know from the volume of complaints which have come my way is that there are hundreds of customers with genuine grievances about the way they have been hustled and in some cases, it seems, completely misled into signing documents of agreement to pay quite large sums of money, which the company, in pretty ruthless fashion, has tried to enforce.
In general terms, therefore, I agree with my hon. Friend's complaints, and I support his criticisms of the company's methods. Unfortunately, as the law stands, we have no power to do what, I am sure, all hon. Members would like us to do. There is a weakness in our protective legislation, in the measures which we can use to stop misrepresentation and objectionable trading practices. Such legislation as we have applies only to merchandise and the selling of goods. It does not cover services, although, as the House knows, we have a Bill in hand, and will introduce it as soon as possible, to remedy this and other weaknesses in our legislation.
356 My hon. Friend asked why we could not bring this amending legislation forward earlier. We had to decide, in so far as we are concerned with Board of Trade legislation, whether to deal first with monopolies and mergers or with our merchandise marks legislation. In deciding to deal with monopolies and mergers first, we have, I suggest, taken the right course. But I agree that the need for the other legislation is urgent, and I hope that we can bring it along as soon as possible.
The other protective legislation that we have is not really relevant to this matter. For instance, the Hire Purchase Acts do not apply to services paid for by instalments and, therefore, we cannot use the "cooling off" period provided in the Acts. The safeguards I have mentioned against misrepresentation, contained in the Merchandise Marks Acts, also apply only to goods and we have seen no evidence to suggest that the company has infringed any legislation for which the Board of Trade is responsible. Of course, if that is so—and that is the advice we have received after going into the matter very carefully in order to see if it was possible to take any action—we have no standing to intervene in the business of Universal Health Studios.
But this does not mean that we have washed our hands of the affair. The company has been in touch with the Board of Trade on several occasions, and, indeed, has asked us to specify the particular features of its trading methods to which we take exception. This has caused us some difficulty because, as I am sure the House will agree, it is not a function of the Board of Trade to go around telling companies how to conduct their business in detail. It is not our job to give companies detailed advice about their sales methods or the provisions they should put into their contracts.
But, at the same time, we have given the company advice in general terms. We have also taken the initiative in pointing out various matters which it might think about in the light of the public criticisms which my hon. Friend and others have helped to generate and in suggesting the general direction in which it might consider altering some of its practices.
357 At the same time, we recognise that some members of the club have no complaint to make, and we have, therefore, to be impartial on that score. But, as my hon. Friend has said, the commonest complaint against the company is that, by means of its high pressure sales procedure, customers have been hustled into singing long-term contracts without having file opportunity to consider them properly.
We have, therefore, suggested to the company that it should reconsider its instructions to its sales staff with a view to giving prospective members a chance to study the contract and think things over before committing themselves. We got some response. The company told us that it was thinking of introducing provision in its contract for a "cooling off" period, but I see from the article in Worlds Press News that it is not now proceeding with this proposal. In view of this and the reported accusation—to put it like that—of lack of co-operation by the Board of Trade, in the few minutes left to me I shall try to give the House a full account of the correspondence we have had with Mr. Bowman-Shaw.
At the end of last month, the company sent us copies of a new contract form, which included a clause enabling the member to cancel the contract by sending a notice by registered post to reach head office in London within three days of signing. Hon. Members can see what is wrong there. We suggested that it should adopt the procedure of the Hire Purchase Acts of allowing a notice of cancellation to be posted at any time before the end of the cooling-off period. We got an assurance that, within 72 hours of the member joining, a notice of cancellation could be given by recorded delivery. This was the assurance that was a basis of the reply I gave my hon. Friend on 5th February. I understand that even this has now been withdrawn. We have had no further communication with the company on that matter.
Another matter on which we had discussions is the arrangements for allowing a member to cancel his contract if he is unable, for medical reasons, to carry out the recommended course for exercises. Of course it is up to the company as the commercial proposition to decide whether it will put this provision into its 358 contracts. We would say that it should be in.
But the company has imposed various different conditions at various times and it is very difficult now to find out whether the contract which it is now using contains this provision. Nor do we know whether the new arrangement would apply to members who signed earlier forms before this proposition was made. At any rate, we have passed this information on to everybody we can think of—the Citizens Advice Bureaux, the Consumer Council and so on—to try to find out from people who make complaints to the Citizens Advice Bureaux whether this undertaking is being carried out. We are still in doubt about it.
Here, I suppose, I must emphasise the unreliability of the company's statements. My hon. Friend says that even this offer is not being carried out. I have just seen a letter from the company, dated 12th February, to a member who produced a doctor's certificate to say that he was suffering from epilepsy and would be harmed by the exercise. The letter from the company says that the company cannot cancel membership agreements and insists on payment under the contract.
We are at present considering whether further legislation is necessary and practicable to provide a defence, a protection, against high pressure salesmanship of this kind. As I have said, we propose to include in the new merchandise marks legislation provisions to prohibit misleading descriptions in advertisements for services as well as goods. We are also considering whether some sort of statutory cooling-off period might be appropriate for contracts covering services provided over a period and paid for by instalments. This would have the same effect as when buying goods by instalments. This is not an easy concept and there are legal difficulties in the way, but we are looking at it.
It is only fair that I should point out that there are other companies operating health clubs whose selling methods, so far as I know, are quite satisfactory. We must not think of all health clubs being criticised in this way. Certainly we have not had complaints about other health clubs.
I admit that in many respects my reply to the debate is disappointing and I am 359 as disappointed as any other hon. Member that we cannot take the action which I think we ought to take. The simple reason is that the law does not allow us to do what we would like to do. However, I am sure that the debate will have served a very useful purpose if it can be given wide publicity, for tonight we are warning people of the sales methods which they will encounter if they go into these Universal Health Studios. If the company does not allow these potential customers a reasonable cooling-off period in which to contract out of the agreements, we would say that customers must give careful consideration to any agreement before signing it. If we can get only that warning over, my hon. Friend will have done a very great service in allowing this statement to be made tonight.
§ 10.29 p.m.
§ Mr. Victor Yates (Birmingham, Ladywood)
I very much appreciate what my 360 hon. Friend has said. May I add to his store one case of which I will send him details? This is the case of a Birmingham woman who has been in two mental hospitals, four times in one, and who within two days of being released from hospital, unknown to her husband, made the arrangement which we have been discussing. Although within twenty-four hours her husband went to make a protest, furnishing a medical certificate, the company still insisted upon the payment of £49 17s. 6d. after this poor woman had paid half a crown. This is monstrous. Something must be done. I support my hon. Friend the Member for Erith and Crayford (Mr. Dodds) in the great protest he has made tonight, and I hope that the Minister will find some way to deal with this iniquitous practice.
§ Question put and agreed to.
§ Adjourned accordingly at twenty-nine minutes past Ten o'clock.