HC Deb 30 January 1973 vol 849 cc1165-6

3.37 p.m.

Mr. Ray Mawby (Totnes)

I beg to move, That leave be given to bring in a Bill to provide for the regulation of the practice of multi-level marketing; and for purposes connected therewith. During the last Session I introduced a similar Bill which was basically designed to provide standards for this new form of selling which is often referred to as pyramid selling. My original interest in this type of marketing was aroused by newspaper reports of abuses which were occurring. It seems that although this new competitive form of private enterprise could provide a healthy stimulus to the market place, it was essential that it did not involve unnecessary loss and distress to people who invested in such companies.

When my Bill was printed last year I had considerable correspondence and discussion with a wide variety of interested groups and persons. As a result, I made a number of changes in the present Bill. It now provides for a cooling-off period between a contract being signed and its coming into operation. This will more closely conform to the present law affecting hire-purchase agreements signed on the doorstep. I believe that it is a fair requirement to make. The buy-back clause now requires 90 per cent. repayment instead of two-thirds where the applicant has satisfied the conditions laid down in Clause 4.

A new clause is now inserted to require that each company shall set up a trust fund representing 21 per cent. of its annual turnover, the terms of the fund to be agreed with the Public Trustee. I believe that this meets the views put to me that a person may be able to prove his entitlement to buy back but find that no funds are available to meet his claims. The trust fund would at least meet that point.

Already one company has voluntarily set up a trust fund of £100,000, and I agreed to be one of the two trustees. A great deal has ben said about that by the mass media, particularly BBC programmes. To end any misunderstanding, I want to state that I am a completely independent trustee with no financial interest whatsoever in any company involved in multi-level marketing.

There are hon. Members who by motions on the Order Paper and other means have shown that they will be satisfied with nothing less than the complete banning of multi-level marketing. But I should not like to ban a system which has given many people a new start in life and the challenge of creating their own business. It is also a system capable of marketing a product in competition with near-monopolies. That cannot be bad for the consumer, because it Gives him a wider choice.

We should not hem in and restrict those who desire to make something of themselves, but we should lay down certain safeguards. The Bill sets out to do that.

Question put and agreed to.

Bill ordered to be brought in by Mr. Mawby, Mr. Drayson, Mr. Ford, Mr. Bray, Mr. Bowden, Mr. Roger White and Mr. Fred Evans.