HC Deb 10 June 1975 vol 893 cc363-77

9.42 p.m.

Mr. David Watkins (Consett)

I am grateful for the expressions of support by those hon. Members who are leaving the Chamber. It is always good to have expressions of support at the beginning of one's speech, because if one does not get them at the end of it, at least, one has had the experience of having the cream on the top.

When I applied for the Adjournment debate on the subject of high-pressure, door-to-door salesmen, I was informed that there was at first some doubt whether that subject would be in order, because it was thought that there was a possibility that no ministerial responsibility would be involved. If that was the situation, clearly the subject would not be in order.

However, after consideration, Mr. Speaker ruled that this was a proper subject to be raised on the Adjournment, on the ground that as my right hon. Friend the Secretary of State appoints the Director General of Fair Trading, who, among his many other responsibilities, has a responsibility for dealing with and keeping an eye on the activities of door-to-door salesmen, this was a proper subject for debate. I am grateful for Mr. Speaker's ruling and I take this opportunity to say that I am also grateful for the advice which I received from Mr. Speaker's staff and from the Clerk of the House during the discussions which took place at that early stage on the question whether the matter was in order.

It would have been absurd if, for technical procedural reasons, this matter could not be debated in the House, because, as I shall be hoping to show during my remarks, there is a danger from the activities of these salesmen to every constituent of every hon. Member.

High-pressure salesmen on the doorstep have, like the poor, always been with us. Certainly, cases have been brought to my attention over a period of several years. During the past year or so there has been mounting evidence in the Press, on the television, and on the radio that these activities are developing into something approaching a national scandal.

The operations of high-pressure salesmen on the doorstep cover a very wide range of products and services. Domestic appliances and various things for use in the home appear to be a particular field in which there is activity. There is also activity in matters such as thermal insulation, although I am aware that following activities of local authorities and others recently there has been some reduction in that.

These activities apply very much to correspondence courses. In relation to that aspect of the subject, I had a case brought to my notice several years ago of a constituent of mine who, on his doorstep, had been talked into purchasing a shorthand and typing correspondence course for his teenage daughter. One of the unfortunate aspects of this was that no sort of assessment was made as to the young lady's suitability for such a course. The upshot was that she started the course and her father, as her legal guardian, was liable for quite a large sum of money, which had to be paid in advance. Sadly, after she had been following the course for a few weeks she found that she was not suitable for that sort of course and did not continue with it. Nevertheless, the money was committed to be paid and had to be paid. I remember them having very unsatisfactory correspondence with the company concerned, which was based in London.

I have reason to believe, therefore, not only from that constituency experience but on a wider level, that there is a substantial amount of this sort of persuasion of people, by unscrupulous talk on their doorsteps and in their homes, into taking up correspondence courses without any assessment being made as to their suitability for the courses and, therefore, their ability to complete them, although there is no hesitation in making sure that they are committed in advance to paying often quite substantial sums of money for which they receive no real return.

I want to be more specific and to relate the experiences of certain of my constituents who were subjected to high-pressure and unscrupulous methods in the selling of electric central heating systems. I shall devote the major part of my remarks to that.

One of the features of this sort of operation is that firms spring up suddenly as if from nowhere, and very often disappear as quickly as they sprang up. The constituents to whom I shall be referring dealt with a firm which is called North East Heating Supplies, which started trading in October 1973 from an address in Leadgate, a town in my constituency. The firm then moved on to an address in Stanley, another town in my constituency, and has subsequently moved yet again to an address in Lanchester, a town in the adjoining constituency of my hon. Friend the Member for Durham, North-West (Mr. Armstrong).

I ought to inform the House at this stage that at 8.35 this evening I received a telephone call—a very courteous call—from a solicitor who said that he was acting on behalf of this firm. Going on reports which had appeared in the newspaper the Newcastle Journal this morning, he claimed that I would he saying certain things which were not true. Let me say straight away that the firm was not even mentioned in the report in the Newcastle Journal.

I am not raising this matter as an issue of privilege, but I think I should put on record this attempt to intimidate a Member of Parliament in performing his duty in raising a matter of public importance in the House in the name of his constituents and, indeed, in the name of the general public. It is really regrettable—at this stage I shall not use stronger language—that such an attmept should have been made, presumably with the purported intent of seeking to gag Parliament.

The firm to which I have referred sold a system of electric central heating which was known as the "Sahara" system. This is a system referred to in an article in The Sunday Times newspaper of 11th May, under the appropriate headline.

The Great Central Heating Scandal". I want first to mention the experience of my constituent, Margaret Swinburn, of Annfield Plain. The normal method of approach is to distribute leaflets in an area asking people whether they are interested in a certain appliance—in this case various systems of central heating, gas, electric, solid fuel, and so on. Miss Swinburn replied indicating that she would be interested in a system of solid fuel central heating. The salesman duly called at her home and she was persuaded, against her better judgment, to purchase an electric system at an estimated cost of £480. After the salesman had left, she thought it over and decided to cancel the order, and so informed the firm, whereupon the salesman called again and again. On the third occasion he called quite late in the evening and left only at around 11 p.m., when Miss Swinburn's brother appeared on the scene and ordered the salesman out of the house.

Miss Swinburn was lucky, because she had the good sense to complain to the Durham County Council Consumer Protection Department. Thanks to the department's advice and intervention she was able to become disentangled from any further dealings with this firm.

Another of my constituents, Mr. William Middleton, of Catchgate, was not so fortunate, and his experience is among the worst of those which have so far been drawn to my attention. He expressed an interest in a gas system of central heating. When the salesman called, Mr. Middleton was quoted a cost of £895, and was persuaded to purchase an electric system which was quoted at a cost of £660, although according to the hire-purchase agreement that he was persuaded to enter into the total cost worked out at £1,082.

My hon. Friend will, I am sure, confirm this point or otherwise when he replies, but I think I am correct in saying that, according to law, a customer has a period in which he can reconsider transactions of this sort, and that this should be made clear to him at the time when the transaction is entered into. This was not made clear to Mr. Middleton, and there was a statement in the documentation connected with his order that it was not subject to cancellation. Not only was he not made clear of his rights; within 12 hours of his signing the papers the workmen appeared at his home and started to install the system.

It is very clear from the numerous complaints that I have had from constituents that the right to cancel has not been made clear to a number of other customers. The salesmen always claim that the operating costs will be low. Mr. Middleton was told that the cost would be £2.24 per week, and would not exceed £3 per week even in the winter. He used the system for six weeks without realising what it was costing him.

The circumstances in which he came to realise what it was costing are rather interesting. He saw the BBC television programme, "That's Life", which is shown on Saturday evenings and does quite a lot in the cause of consumer protection. Apparently one evening this programme was dealing with the cost of electric central heating systems. As a result he read his meter and, in his own words, he had "a fright". He had been told that his existing use of 32 units of electricity per week would be halved. He found that in fact it had increased fourteenfold, to over 450 units per week.

In every case which has been brought to my attention, people of modest means have been coerced into commitments involving hundreds of pounds. In many cases, they have found that they could not afford to run the installations for which they had paid so dearly and, in fact, suffered miserably during the cold north-east winter.

These unscrupulous operators have left behind not customers but victims, and a trail of misery, especially amongst elderly people, who, in some instances, laid out their life savings to assure themselves—they thought—of a warm, centrally-heated home for the winter.

There is no doubt that there are victims of these techniques all over the country. I quote as evidence of that the growing volume of publicity via Press, radio and television. I make the point that this publicity is very much to be welcomed, because it seems to be one of the best means of alerting people to the dangers of this sort of approach.

I say in passing that on 1st May, the two weekly newspapers circulating in my constituency, the Consett Guardian Chronicle and the Stanley News, highlighted on their front pages an excellent article by their reporter, Mrs. Elaine Johnson, warning people of these activities. This has resulted in the bringing to light of many cases of people having seen the article and having now approached the consumer protection department, contacted me, and so on. This shows that local papers, in addition to the national Press, have a valuable job to do.

I cannot let this occasion pass without paying tribute to Mr. Clifford Bateson, divisional trading standards officer for the Northern Division of the Durham County Consumer Protection Department, who is ceaseless in his efforts to protect consumers and who has provided me with a great deal of valuable information and taken many practical steps to protect people against this kind of approach.

One of the most disturbing features of these operations is that they bring discredit upon reputable salesmen who perform a valuable service and whose services are widely appreciated. In many instances they are people who are known to their customers, who perform a valuable job in door-to-door selling, and who have been doing so for many years. It is sad that they, too, are discredited by the activities of these unscrupulous operators.

It is easy to say that people are the victims of their own gullibility, but people feel safe in their own homes. They do not expect to be assaulted physically, verbally or emotionally in their homes by psychologically applied techniques. Because they do not expect it, they are more vulnerable to glib and unscrupulous operators than they would be when shopping, say, in a market outside their homes.

I am aware that powers exist to protect people under the Fair Trading Act, and the Trade Descriptions Act and with the Director General of Fair Trading, with whom I have been in touch about this matter. As I understand it, he is in the process of collecting evidence about the activities of door-to-door salesmen, and I understand from him that when the Consumer Credit Act comes fully into operation, which is expected to be next year, he will have very strong powers to examine the standards of door-to-door salesmen and, in fact, will license them.

I hope that my hon. Friend the Under-Secretary can give me an assurance—perhaps it would be more accurate to say "a reassurance"—about the determination of his Department to make the teeth of existing legislation and legislation which is to come really bite.

9.59 p.m.

The Minister of State, Department of Prices and Consumer Protection (Mr. Alan Williams)

May I congratulate my hon. Friend the Member for Consett (Mr. Watkins) on taking this opportunity of raising a matter which is of considerable public importance. I should like to thank him for the compliment which he has paid to his local trading standards officers, because they and their colleagues throughout the country are doing tremendous work on behalf of the consumers that is very often unrecognised. I should also like to congratulate my hon. Friend on arranging that the Adjournment be taken at such a sensible hour.

It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, That this House do now adjourn.—[Miss Boothroyd]

Mr. Alan Williams

I thought, Mr. Deputy Speaker, that at that stage I could go home.

Mr. David Watkins

Not before my hon. Friend has answered me!

Mr. Williams

That is something I should not dare do.

I was very concerned about my hon. Friend's reference to the telephone call that he received from a solicitor. I do not know the full circumstances of the call. If it were merely an attempt to remedy a factual error, it was in order, but if it were an attempt to intimidate a Member of Parliament and to deter a Member of Parliament from raising a matter of public concern in the House, I am sure that my hon. Friend should consider whether he should ask for this matter to be looked at as a matter of privilege. However, that is a matter for him to decide. He knows that the House always takes such a situation very seriously.

I should also like equally to pay tribute to The Sunday Times for a well-researched article which helped to focus attention on this issue and also to the programme "That's Life" which did a valuable research and publicity operation in this sector.

My hon. Friend has correctly said that the majority of doorstep traders are decent, honest people who want to carry on a normal commercial enterprise and to be fair to the people with whom they are dealing. It is as unfortunate for them as it is for the public that their reputation suffers every time there is a story of the minority of rogues who all too often catch people who are unable to protect themselves. The trouble has become perhaps more acute because instead of it concerning the sale of brushes, polishes or dusters, in the gadget community into which we have now moved, all too often the goods which are being sold are not only intricate and difficult to assess at the time of purchase but also tend to be high cost.

Because they are high cost they are often transactions which are undertaken in conjunction with an arrangement for a credit deal sometimes running into many hundreds of pounds. I know that in the case of central heating sales to which my hon. Friend has referred there have been very considerable sums of money involved. Although there is some protection, the rogues have found a way round it. We are now in the process of finding a way around the rogues' method of avoidance.

Let us examine the type of abuse which can arise from doorstep sellings. Attention has been drawn to a whole series of such matters, but, as we have this opportunity in the House to add to the publicity which enables the public to be cautious when approached even on their own doorstep, it would be useful to outline one or two of the methods which have been employed.

There is, for example, the method of telling someone that if he had certain work carried out on his house, such as rendering a wall with a particular waterproofing material, his house will then become a show-house for the area and he may then receive a discount or a commission for any new customer who goes to a firm as a result of looking at the house. All too often the same offer has been made in respect of several other houses in the area. In many instances no one appears and it is a spurious offer. It is an offer which would have to be honoured should the situation arise in which people in fact came to look at the house, but all too often no one ever comes and no commission arises.

A further abuse is the educational approach, with a person explaining that an educational survey is being carried out, perhaps in relation to certain types of books and equipment. It is only when the salesman has managed to get into the house that he reveals that it is not a survey but that all he is trying to do is to sell encyclopaedias or other books to the householder.

There was a variation of that approach by which many people were caught. I remember referring to it during the Committee stage of the Fair Trading Bill. Large numbers of people purporting to be overseas students working their way through college or around the world were appealing to people's sympathy, asking them to give them orders to enable them to pay their college fees and to complete their education.

Sometimes people pretend that they are undertaking a research survey. This is an easy method. The public are fairly accustomed to such surveys, and are taken in. It is not always a matter of gullibility. If it were pure gullibility one might say that the public should do more to protect themselves. All too often we are dealing with skilled con men, who know very well the type of appeal that may be successful with the householder to whom they are speaking. They may make a health approach in one house and a completely different approach in another.

Another type of sympathy selling, which is a variation of the raising fees for study approach, is the pretence that certain products are made by disabled people. There has been an attempt to limit this, but the rogues, who are heartless in the way in which they carry out their activities, do not care what damage they do to the sales prospects of those genuinely selling goods produced by the disabled. They have managed to devise techniques whereby for a minimum contribution of work, sometimes just placing something in a package, they purport to be selling goods which have originated from work by the disabled.

Then there is the sheer pressure approach. Pressure can take various forms. As my hon. Friend said, it can be a mere rush of words, a continuous barrage of persuasion which in the end forces the householder in desperation to say "All right, I'll buy something", to get rid of the salesman. That would not apply to something as heavy as a central heating system, but it can apply to many small items. Whilst small items may not amount to much individually, if such sales take place several times in each road they can lead to considerable financial killings by those carrying out this form of deception.

There is also the sheer misrepresentation, which is perhaps most clearly brought to public attention by the sort of example my hon. Friend gave, that of central heating, where there have been false claims, completely unsound claims. about running costs. The public cannot establish until many months after they have had the appliances installed that those appliances do not live up to the claims. While there is equal legal protection whether the claims are in writing or by word of mouth, it is much more difficult for the consumer to establish a case in court when it is a purely oral claim. All too often that sort of misrepresentation occurs where we are dealing with high-cost goods.

Then there is the novel approach of the person who says that he wants to offer a cheap service, or even in some cases a free service, for old electrical equipment. Having look at it, he may decide that it is beyond repair, and he then proceeds to try to sell another product which, conveniently, happens to be available.

There are also the phoney offers of discounts if a person purchases on the first visit. This is a sheer attempt to stampede people, and it is here that people should be very cautious. If a firm is willing to offer a huge discount on this visit, it is not likely that that firm will offer a substantially different price on the second visit, yet some people fall for this con trick, believing that they will get the benefit of a high discount if they sign up quickly. All too often they are unable to escape from the deal into which they have entered, particularly as it is not uncommon for agreements not to be drawn up in a very precise and accurate way, and one ends with agreement forms which have been sketchily and inaccurately completed and which therefore do not provide an adequate basis for legal action subsequently.

These are among a whole series of methods used, and I am sure there are more. My hon. Friend indicated that the Office of Fair Trading is now inquiring into the techniques which are employed. There is legal protection, and it is very effective in many areas. There are certain sectors in which it is less effective than this House would have wished at the time the legislation was passed. The Hire Purchase Act, 1965, allows a four-day cooling off period, to which my hon. Friend referred, but the method of getting round this is by having people enter into what is not strictly a hire-purchase deal. As my hon. Friend knows, hire purchase is merely one form of credit transaction.

During the passing of the Consumer Credit Act I was told by the Finance Houses Association that one can have more than one hundred different forms of credit agreement to choose from in the credit field. As Parliament devises protection which applies to one particular form of credit, new forms of credit agreement are devised which are not covered by the law. My suspicion would be that in the instance to which my hon. Friend referred the deal was based probably on a personal loan, which is a separate transaction altogether. Then the sale technically becomes a cash sale and the doorstep salesman avoids the protection that this House intended all purchasers by credit to have.

It is for that reason that we have taken further steps in the Consumer Credit Act. My hon. Friend will be aware that we shall now be extending the cooling-off period from four to five days for transactions over £30. This is necessary because it is not only the kind of problem to which my hon. Friend referred that has arisen in this sector. There have been far too many instances of people buying expensive equipment, perhaps freezers or other expensive electrical appliances, on credit on the doorstep and then either not receiving the goods, perhaps because the firm has gone into liquidation, or upon receiving them, finding the goods inadequate. If either they do not receive the goods or they return them as inadequate, they may find difficulty because they have entered into a separate transaction for credit and that under the agreement, or the piece of paper that they signed, the finance house did not pay money to the householder but paid it immediately to the supplier of appliances. They had thus entered into a credit deal, and though they had never received the money, they had entered into an obligation to repay it and still had a commitment to repay that debt, even though they may never have received the goods or may have returned them on the ground that they were inadequate.

In an article dealing with these central heating abuses it was pointed out that in one case a purchaser had several hundred pounds worth of this equipment stored away in his loft because it was too expensive to run, and yet he was still having to pay under the credit agreement for the purchase. This was an abuse which had to be covered. We covered it several ways. First, we have made the finance house equally responsible in the case of a deal. All too often it is impossible to find the people who sell these products since they move from one address to another and it is therefore impossible to initiate legal action.

We put upon the finance house the duty of ensuring that it is careful in the people it allows to act as its agents and if it is faulty in the selection of agents it must share some of the responsibilities for the difficulties and hardships which the consumer suffers. In any case, we feel that a finance house, with its wide connections, is far more likely to be able to pursue a trader who is guilty of such an abuse than is an ordinary member of the public. The finance house can eventually reclaim its money from the trader.

Another requirement is that anyone who is engaged in any sector of the credit industry, be it someone advancing money, someone selling via credit, someone involved in debt collection, or someone operating a credit reference agency—the sometimes-termed "blacklist"—will have to have a licence. That licence is granted by the Director General of Fair Trading, and one of the factors he takes into account in determining whether to give a licence, whether to review it or to revoke it, is whether the person applying for the licence or holding it has any record of using unfair methods to the consumer in order to obtain deals and credit agreements.

Therefore, the action open to the Director General is far more effective than being able to impose a fine of a few hundred pounds. He will be able to tell someone that that person has gone far enough. He will be able to say that one wrong step is a mistake and that perhaps a second wrong step is a mistake, but that after that a clear record is established of someone who seems deliberately to be indulging in a dubious trading method or who was not diligent enough to ensure that his trading methods were fair to the public. In these circumstances the person would be put out of business by being refused a licence. The licensing system will be a very good club with which the Director General will be able to beat into line some of the more dubious and shady practitioners in credit sales.

There is also the Trade Descriptions Act. I know from discussions that we have had in various Committees that my hon. Friend is well aware of the operation of this Act. It is important not to underestimate its value for the consumer. It makes it a criminal offence to mislead the public as to the performance and the physical characteristics or behaviour of a product. As my hon. Friend knows, the enforcement officers under this legislation are the weights and measures officers or the trading standards officers, whatever they are called in any part of the country. They will certainly give very willing help to any member of the public who feels that the Act has been breached.

It is worth pointing out that under the powers of criminal courts legislation it is also possible, where there has been a conviction under the Trade Descriptions Act, for the court, in addition, to award compensation to the consumer for any loss he may have suffered.

We and the Director General of Fair Trading are carrying out a review of the operation of the Trade Descriptions Act, and certainly I will bear in mind the points which my hon. Friend has made. In addition, there is, as he has indicated, a study being carried out by the Director General on doorstep selling. He is eager to have any information that is available on new methods, new abuses, so that these can be incorporated in the proposals which he will eventually put forward.

In the meantime, the Office of Fair Trading is also preparing a leaflet for the public to help—as I hope this debate will help and as the articles in the Press and the items on television have helped—to focus public attention on an area of abuse which could be markedly diminished, if not abolished, by public awareness of the types of duplicity and trickery to which some of these rogues resort.

May I give him this assurance, that as far as the Government and the Director General of Fair Trading are concerned, we regard these not as petty crooks, because in all too many instances they are making a great deal of money out of these shabby and shoddy operations, but as people who should be put out of business. We have made a start in the Consumer Protection Act and will be bringing forward legislation that will complete the task. Between the Consumer Protection Act and the recommendation that will eventually come from the Office of Fair Trading we hope, if we cannot put everyone out of business who is a dubious operator in this sector, to make life much more difficult for those who remain in the business and to be able to put the vast majority of them out of business.