OVERSEAS REMOVAL INDUSTRY

HC Deb 07 March 1977 vol 927 cc1191-202

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Frank R. White.]

5.15 a.m.

Mr. Bruce George (Walsall, South)

My delight in obtaining this Adjournment debate has been ever so slightly tempered by the fact that it would take place at an extremely late hour. At 5.15 a.m. my worst fears are confirmed. It is a testimony to the importance of the subject that both the Minister and I are still present for this debate on the overseas removal industry.

I have no financial interest whatever in this industry, although in my adolescence I worked for my grandfather's small road haulage business which gave me some insight into the problems, the strength but, more important, the potential weaknesses of that industry.

My first awareness of companies going into liquidation followed investigations into the complaint of a constituent angered at the treatment of her daughter who had gone to Australia and had hired, in my view, the misnamed company QRS—Quality Removals and Shippers—to transport her furniture and personal belongings to Australia.

The QRS brochure, in extolling its virtues, states: The next thing you know, everything arrives safely at your new home". Regrettably they did not. The brochure goes on Complete and post the reply paid card with confidence and you have my personal assurance"— states the managing director— that QRS will look after you every inch of the way. The word "inch" is important to at least 400 people because their goods travelled no more than a few inches and never moved from warehouses in the West Midlands. Indeed, many people who lost their money had to pay again for another company, admittedly at concessionary rates but at a higher rate than the original if they were to have their goods moved to their new homes.

Another company, Seven Seas, based in Southampton, got into difficulties leaving behind many hundreds of frustrated and angry customers, and one of them, already having had the misfortune of hiring QRS, lost her money a second time.

The scene returns to Walsall—the West Midlands seems to have more than its fair share of removal companies getting into difficulties— where Oceanmount ceased trading—its leading light was said to be a Mr. Hustead who has been rather difficult to trace—and another set of poor unfortunates were involved. Many of the people involved with Oceanmount still have their belongings at a farm in Shropshire, and a Mr. Gough, who owns the warehouse, is not letting the goods free until he is paid. I wonder whether the Minister can think of ways in which these goods can be released to the people who have migrated? One person who had paid a fee to Oceanmount must pay another fee and an additional £151.20p, including VAT, to have his goods released from storage in Shropshire.

The collapse of these companies is worthy of close examination, and in the case of QRS and Oceanmount, I trust a very thorough examination. The financial disaster which led to these companies going into liquidation is very considerable.

These companies are not entirely separate entities. The liquidator of QRS, a Mr. Leopard, was reported in the Birmingham Post on 18th January as saying: It is evident from my investigations there are certain links between QRS and Ocean-mount. I go further and say that there are considerable links, and I hope that in the public interest there will be a very close investigation so that the true facts can be established.

In the case of Seven Seas, I personally have no evidence of any impropriety, but I believe that here, too, it is in the public interest that there should be a close scrutiny.

In 1972, when a firm called Michael J. Howard Agencies Limited went out of business leaving about £50,000 owing, it was a firm called Seven Seas which stepped into the breach. Just before Seven Seas collapsed, it was another company, Expediting and Transit, involving Mr. Howard, which, in turn, reciprocated by stepping into the breach. So these relationships between companies getting into trouble merit a closer look by Government Departments or other agencies, such as the police.

It is traumatic enough for people to move themselves to a new land. It is even more traumatic if their belongings stay 12,000 miles behind them. We should not neglect these people because they have left our shores. We have a moral and, to my mind, a legal obligation to ensure that they get justice.

I am not pursuing companies which go bust, though, regrettably, far too many do. But I think that an exception can be made in the cases which I have mentioned.

This is an easy industry to break into. Most of the 1,500 or so operating are reputable. It is only a dozen or so that I would question in terms of their experience, financial viability, credibility and integrity. All that is needed is a telephone and a grandiose, all-embracing title on some headed notepaper, such as "Transworld Removals". I very much hope that there is no firm of that name. It needs very little capital, and no transport is necessary. There is no validation procedure, and anyone applying to join an organisation such as the Association of Removers finds that it is a purely voluntary process. Thankfully, it has had the good sense to turn down a number of companies that applied to join it which have subsequently gone into liquidation.

Nevertheless, it is easy for these companies to set up in business. Some of them, with small overheads and minimal financial backing, can take on the larger and more established companies and undercut them substantially. Many companies which have been established in this line of business have left it because they have been very much undercut, and this has been to the detriment and not to the advantage of the travelling public.

In taking money in advance, some of these companies give a synthetic impression of viability. But, as the liquidator said in one case, the company was "hopelessly insolvent". Many of these companies are involved in the cash flow game, which is detrimental to consumer interests.

The heartache caused by their collapse is considerable. I know of families who have been forced to return from New Zealand because they could not get their goods out of this country. In many cases, there is real hardship.

What can be done? Since I first raised the issue last summer, I have become very much aware that progress has been made. I thank the Minister for his interest in the subject, and I want publicly to compliment the work of the West Midlands County Council's consumer protection department.

There are lessons to be learned to diminish the likelihood of a repetition of the distressing circumstances experienced by the victims of these defaulting companies. As the industry becomes more and more international, and as some unscrupulous, excessively ambitious, often incompetent or potentially dishonest individuals see the pickings to be made in the industry, there can be more trouble ahead for prospective migrants.

The industry itself must help to put its own house in order. If a person goes to a professional association such as the BAR, there is no guarantee that the company will transport his goods to Australia or New Zealand, but the chances are immeasurably improved. This rather conservative industry has to put its own house in order and has made progress to this end. It has to devise a tight code of practice. It is now discussing a bonding system, rather on the lines of the ABTA scheme, but there are differences. I believe that there must be some form of compensation scheme.

I received in my post yesterday a copy of a guarantee issued by Pickfords, one of our obviously reputable companies. That guarantee offers hope for the future if others follow suit. I know that two companies have embarked on payment after goods have arrived. The industry itself must learn the lessons of these collapses and adjust its practices to allay public fears and protect its reputation.

In another issue on the licensing of private security firms I am calling for a public licensing authority. This would be rather grandiose in the case of the removal industry. I believe, however, that there should be some form of licensing. The BAR maintains that the powers are already with the Department of Transport under the Transport Act 1968. The Department, however, denies that this provision can be used for such purposes. I believe that it offers a prospect of some form of licensing and validation through the operators' licensing system. I was interested to see that the Department of Transport did not take too kindly to the use of EEC regulations being discussed as a means of regulating the industry.

Perhaps I can refer to the Department of the Environment's consultative document on the transport managers' licence It says that the EEC directive on admission to the occupation of road haulage operator offers a way of licensing because Part V of the 1968 Act contains a provision for a transport managers' licensing scheme, and this will be used as the legislative basis for implementation. The directive requires road hauliers to be of good repute, of appropriate financial standing and professionally competent. I hope, therefore, that the Department will look at this document to see whether this can form the basis of some form of licensing system. On page 3 the document states The Directive requires that an operator shall be of good repute, of appropriate financial standing and professionally competent. An operator who is not professionally competent may designate another person who is, provided he is of good repute, and that he continuously and effectively manages the transport operations of the business. Similarly, an undertaking must nominate a person who satisfies these requirements. Other persons in the undertaking may also be required to show good repute". We hope that the Department will accept that and thus provide some form of validation. Ultimately, however, the responsibility must lie with the customer. I hope that those who decide to go abroad will not be beguiled by glossy advertising, slick sales techniques and, above all, by what looks like the lowest quote. Many people in New Zealand and Australia regret that they did not heed this advice.

My advice, therefore, is that people should shop around, seek sound advice and make sure that the company is financially sound. The chances of people's goods arriving are greatly increased if they go to the company belonging to a reputable association such as the BAR.

The High Commissions have tightened up on the advice that they have been giving. They cannot name names and direct people to or away from companies. But they are endeavouring to advise applicants to use reputable contractors and to warn them of potential pitfalls. That is positive guidance that I welcome.

I am pleased that the migrant Press such as Australian Outlook is sharpening up its procedures for vetting advertisers, although it costs money to refuse advertisements. The editor of Australian Outlook devoted a great deal of space to this subject and issued an editorial warning people of the dangers of these peripheral companies. He wrote to me explaining that the paper went to a great deal of trouble to vet companies which were asking to advertise with it, but he added this was not foolproof. At least the paper is seeking to vet applicants. I wish that "Yellow Pages" could do the same. "Yellow Pages" is the major source for pulling in the gullible who go for the slick advertising and are caught.

Is the Minister prepared to get the BAR to discuss greater protection for the consumer and perhaps the possibility of an officially recognised self-regulating scheme? Is the Minister contemplating changes in the law on advertising? Is he satisfied that recent legislation such as the Insolvency Act and the Companies Act give proper protection to the consumer, and will he discuss with the Department of Transport the possibility of using EEC regulations as a basis for some form of validation?

If we could do all these things perhaps the disasters which have befallen a relatively small but significant minority will not have been in vain. Perhaps then those who are contemplating moving—perhaps in the EEC—will be afforded the measure of protection that they have so far been denied.

5.30 a.m.

The Minister of State, Department of Prices and Consumer Protection (Mr. John Fraser)

I am grateful to my hon. Friend the Member for Walsall, South (Mr. George) for raising this matter. The Government appreciate the scale of the problem, and we have been very much concerned about the anxiety and financial problems that have arisen.

About 700 emigrants were affected by the collapse of QRS and Seven Seas. They had losses of about £400,000. It is bad enough to wait through the night for an Adjournment debate, but imagine the plight of somebody who waits on the other side of the world for his home and personal effects. If they do not arrive the family has to pay in some cases not once again but twice for their delivery.

I am very glad that already my hon. Friend's initiative has resulted in some publicity about the matter. I hope that the debate will be widely reported, because it is necessary to warn potential emigrants of the need to be careful about their choice of a shipper.

I should like to say something about what I have done. Potential emigrants will be in touch with Commonwealth High Commissions at some stage, so the Commissions are an important source of sound advice. I wrote to the Commissioners of Australia, Canada and New Zealand suggesting that they advise potential emigrants to choose a firm that is not only reputable, preferably belonging to the British Association of Removers, but long-established and unlikely to have liquidity problems. I have had encouraging replies from the three Commissioners. The Commissions now remind potential emigrants of recent liquidations and give them suitable advice about the choice of a reputable and reliable shipper.

I suppose that other advice that can be given follows the advice given by the Commissions. Potential emigrants should have no difficulty in ensuring a move that is financially trouble-free if they deal with reputable firms. For example, if they deal with Pickfords—and I give this only as an example—although they are required to pay for the move in advance, such payment is covered by Pickford's financial guarantee scheme, in effect a bonding scheme, underwritten by an insurance company. This provides that if Pickfords becomes insolvent a customer's money is refunded to him plus an additional sum to cover any subsequent increase in overseas removal rates. This seems to me an admirable arrangement, and I hope that it spreads. I think that it is the sort of scheme my hon. Friend has in mind for the whole industry.

Emigrants to New Zealand and Australia using the services of another firm, a member of the P & 0 Group, do not have to pay the costs of the sea leg of the move until their goods arrive in the country of destination. That is also helpful. I understand that at least one other firm offers that facility.

Thirdly, one can advise emigrants to deal with members of the British Association of Removers. I would advise them to deal with one of the reputable companies I have already mentioned or BAR members, who, to their credit, refused membership to both QRS and Seven Seas.

BAR can protect its customers in a number of ways. It is discussing schemes now, including indemnity cover in the form of bonds, escrow accounts and minimum financial resources. It has come across many technical problems, and these would not disappear in a statutory scheme of one sort or another. I accept that the cost of any protection scheme introduced by the Association would have to be passed on to customers, and that this may make its members less competitive with the pirates, who already have the advantage of being able to undercut normal rates because they are working with virtually no capital. Incidentally, I am not sure that "pirates" is the right word, because at least pirates get to sea, and some of these companies have not been able even to do that. Emigrants who have had to pay twice to ship their goods would doubtless now agree that offers made by QRS and Seven Seas have turned out not to be cheap at all. The Association's members could make capital out of that. There is no reason why a protection scheme should not work to the members' advantage as much as to their customers' advantage.

I should like now to say something about action in hand or in contemplation in relation to at least those two companies that my hon. Friend mentioned.

First, I turn to offences under the Trade Descriptions Act 1968. That Act makes it an offence, among other things, for any person in the course of business knowingly or recklessly to make a false statement about the nature of any services provided. I understand that both West Midlands County Council and Hampshire County Council, which have a high reputation for consumer protection, are considering whether there is evidence of offences under the 1968 Act.

Secondly, I understand that the police in both the West Midlands and Southampton are making certain inquiries into the affairs of QRS and Seven Seas.

Thirdly, the liquidators of QRS and Seven Seas have a duty under the Companies Acts 1948 and 1967, to investigate -the companies' affairs, and, if their inquiries reveal any facts which could lead to criminal charges, to report them to the appropriate authorities.

The Department of Trade is seeking further information regarding three companies—QRS, Seven Seas and Ocean-mount Ltd. I shall give some thought to whether anything can be done about the goods which are now abandoned or holed up in their warehouses.

Fourthly, the Director General of Fair Trading is actively considering whether he has any evidence of the directors concerned having carried on a course of conduct detrimental to the interests of consumers in the United Kingdom. The Director can ask an offending trader to mend his ways. If he cannot get an assurance to this effect from the trader, he can bring proceedings in the courts. The courts can seek similar undertakings or, if necessary, make an order compelling the trader to refrain from a particular course of conduct. A breach of a court order is punishable as contempt of court.

There is also action which can in due course be taken under the Insolvency Act 1976. My hon. Friend asked whether I was satisfied with the working of that Act. I cannot answer that question, because the Act is not yet in force. When it is in force it will provide that in certain circumstances the court may order an individual to be disqualified from taking part in the management of a company for a specific period if he has been a director of two or more insolvent companies which have been wound up and his conduct makes him unfit to be concerned in the management of a company.

Mr. George

All I am saying is that he gets two bites at the cherry. He can go bust and then go bust again before the law catches up with him whether the Act is in force or not.

Mr. Fraser

I do not want to take up too much time debating that matter tonight. Under the Companies Acts there is provision for disqualifying a person acting as a director if he has been guilty of fraud or mismanagement. The Insolvency Act carries that principle a little further, but it is too early to make a judgment about it.

Turning to "Yellow Pages" advertising, because of the high number of advertisements the Post Office cannot accept responsibility for vetting the services offered by advertisers. It is not in a position to judge whether a firm is ill-equipped or unqualified to perform the service that it advertises in a one-line entry.

Under the Transport Act 1968—operators' licences—any question of the licensing of furniture removers is a matter for my right hon. Friend the Secretary of State for Transport. The EEC directive on road haulage operators applies only to vehicles of 6 tonnes gross and above. Regulations to be made by my right hon. Friend under the 1968 Act to put the provisions of the directive into force will apply to vehicles above 3½ tonnes gross. Most vehicles used by the so-called "pirate" removal companies are under 3½ tonnes gross. However, my right hon. Friend feels that there are insufficient grounds for varying the 3½ tonnes threshold for a particular type of business—for example, furniture removers.

My Department has put to the Department of Transport claims by the British Association of Removers that the EEC directive is being interpreted too narrowly. The Department of Transport says that the EEC directive is aimed at rather wider business competence than simply a capacity to operate vehicles safely. Before granting a standard operator's licence, the licensing authority will therefore ensure that, as far as possible, the applicant has sufficient resources properly to run a transport business of the scope indicated by the number and size of his vehicles. The Department feels that that is a long way from expecting a licensing authority to ensure commercial viability in trading. Bankruptcies and bad debts are not uncommon amongst hauliers of all kinds. The Department believes that in considering how to protect the public from the consequences of financial failure by removal firms the operator's licence is only marginally relevant.

I realise the extent of suffering that is caused when overseas removal companies become insolvent. I experienced the problem in my own constituency recently when emigrants were going to the West Indies. I have done everything that I can to ensure that prospective emigrants receive advice on where it is best to go to have their effects shipped. The best solution would obviously be some form of licensing—I use that word loosely—control system, or legal sanctions against firms that take payment for overseas removals without a bond or other protection for the emigrant.

It is not easy to devise a scheme that will work, and I do not have a definite scheme in mind. However, I shall undertake to discuss with the British Association of Removers, reputable companies and my hon. Friend ways in which we can overcome this severe problem which affects several hundred people. I shall be prepared to look at any representations, and I hope that eventually we shall come across a scheme—it might be voluntary or involve legislation—that will remove the uncertainty and unfairness that so many people have tragically suffered when they have moved to the other side of the world.

Question put and agreed to.

Adjourned accordingly at eighteen minutes to Six o'clock a.m.