§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Boswell.]12.13 am
§ Mr. David Amess (Basildon)
I very much hope that the subject that I shall draw to the House's attention this evening will be of general interest. It raises certain principles upon which we may wish to reflect. Having discussed the subject with colleagues, I believe that there are few hon. Members who have not yet received an envelope from America suggesting that detail of good news are to follow. I will give some details of the good news shortly. I recognise that business is very tough for many people. Competition within various sectors is extremely keen and advertising has an important role to play, but I deplore the explosion of junk mail dropping on to our mats, the clear objective of which is to encourage individuals to participate in timeshare promotion schemes.
The whole question was drawn to my attention by the good endeavours of a number of constituents, who complained about the volume of unsolicited mail and their disappointment at later not receiving the prizes to which they believed that they were entitled when they opened the envelopes.
When I and my good wife received letters from America a few weeks ago, we opened them and were greeted with the glad tidings that we had both won cars. The company which sent us the news is a marketing organisation based in Sheffield. [HON. MEMBERS: "Name it".] When we opened the envelopes, we were told that we were gold star winners and that we had both won cars. Naturally we were excited. During our animated conversation, my wife decided that she would have a white car and I decided to choose a blue car.
After making a telephone call and determining that the good news was indeed correct, I thought that I would be cautious and put pen to paper. I received an interesting reply from the marketing company. [HON. MEMBERS: "Name it."] I am under pressure from my hon. Friends to name the company.
I quote from the letter:I was very surprised to learn that you went as far as discussing what colour Ford Fiesta you would choose and how excited your household were that morning. I did, however, detect a certain tongue in cheek tone, and if you were truly under the impression that you had both won a Ford Fiesta, which I seriously doubt, I should like to bring your attention to two main points of the letter. Firstly, the opening line begins, 'If you bring the number', and secondly, in the sentence below the first box section it clearly indicates that this is purely an illustration.Your request finally to take advantage of my offer of contacting Mr. Nokes and Mr. Aspindle is purely a figure of speech, but if the purpose of contacting them is to verify whether or not they were genuinely awarded motor cars, I can assure you that written and photographic evidence has been submitted to the Office of Fair Trading and Advertising Standards Authority. I am sure that, put in their position, you would not want to be hounded by countless calls from doubting members of the public as to the authenticity of the claims.What a lot of codswallop, dishonest in the extreme. Judging by the letter, the company is not even ashamed of its activities. [HON. MEMBERS: "Name it."] Responding to the pressure of my hon. Friends, I have substantial documentary evidence of the veracity of what I have said.
1086 I and my wife then attended another presentation to which we had been invited, at fairly seedy premises in Leicester square. After being served tea in plastic containers we were, as it were, counselled. Once our credentials were established, we watched a film of nauseating crassness about the wonders of timeshare. We were then assigned a South African gentleman. He assumed that our appetites had been whetted and it was clear that he hoped that he would be able to make a sale. He inquired my occupation. When I told him that I was a Member of this good House, he turned somewhat pale, or paler than I look now. Putting it mildly, he could not wait to get shot of me. We were then ushered to the door, where we were presented with our card. Those at the door went through the procedure of checking our lucky number with the card whereby I would collect my car or whatever.
It will come as a great surprise to the House when I say that I did not win a car, nor did I win a motor scooter or money. Instead, I was presented with a plastic alarm clock and a delightfully and exotically described Queen Anne entertaining set. The entertaining set would not entertain one person, let alone a gathering of guests.
I have recently received more invitations. The House will be interested to know that one of them was from the same company in Sheffield, which clearly had not crossed me off its mailing list. The company tells me that I am again a gold card winner and that I am guaranteed to win either a Volvo sport, a sport boat with outboard motor or £2,000 in cash. I am pleased to be able to tell the House that I have made an arrangement to attend the presentation in a fortnight's time. That is why I am resisting pressure to name the company.
I have also received a letter from a trading company based in Bradford, in which I am told that I am a gold card winner. I am told also—I am indeed lucky—that I have won a 1991 Ford Escort 1.6 Ghia or a Bahamas cruise, or a £1,000 cash prize. I shall be attending that company's presentation in the constituency of my hon. Friend the Member for Brentwood and Ongar (Sir R. McCrindle) in about a fortnight's time.
Finally, I have received a card from Dallas, Texas. It tells me that I am yet again a gold card winner, not a silver or bronze winner. It seems that I shall receive either a Ford Fiesta or an Electra sport boat. If my right hon. Friend the Member for Southend, West (Mr. Channon) were still in his place, I am sure that he would be able to accommodate me with some water on which to enjoy the pleasures of a motor boat. I am in something of a dilemma when it comes to establishing where I shall be able to cruise with my wife and, on reflection, I have not made an appointment with that company: I do not wish to be greedy and I wish some prizes to be in reserve for future winners.
I know that the two organisations with which I have made appointments will be delighted by the news that I am able to give the House tonight, which is that I shall be attending both presentations complete with a camera crew. I know that the crew will wish to film me as I drive down the motorway in my new car and as my wife sails down the Thames in our new sport boat. The presentation will be completed, of course, by pigs flying.
I have two secretaries who job-share, one of whom has recently related her good fortune. She received a letter from one of the timeshare companies, in which she was told that she had won a 22-inch colour televison or £2,000, or an attractive luggage set, a car or a camera. She was told in the letter that she and her husband—she is married to 1087 one of the constables who serves in the House—could collect a fabulous prize merely by attending the timeshare presentation.
There was no mention at the outset of having to spend two hours listening to one of the presentations in Kensington. As soon as they arrived at the company's building a form was shoved into their hand and they were asked what sort of holiday they would prefer. They were then ushered into a small room with a few other people and left to watch a film with a famous person talking about how fantastic timeshare villas were. As soon as that finished, they were taken to sit at a table with a salesman who tried extremely hard to sell them a timeshare scheme. He got very impatient when he learned that they were not interested. It was hard sell at its worst.
When he realised that he was not going to sell anything, he got up and left. My secretary and her husband called him back and asked about the prize. He said that the number on the letter referred to numbers on small lockers on the wall. On closer examination, none of the lockers had a number. However, he opened one and said, "Oh yes, you have won a camera." He turned to a box on the floor that was full of cheap and nasty cameras that would be described as mickey mouse.
Only this morning my other secretary received some good news. She has won a Caribbean cruise, a Florida dream holiday, £1,000 cash, seven days for two in the mystical east, a Ford Escort or a holiday in New York.
Since the subject for this Adjournment debate was announced, it has attracted a fair amount of media interest. I pay a warm tribute to a Conservative Member of the European Parliament, Mr. Edward McMillan-Scott. He is the MEP for York and the Conservative spokesman on tourism and transport. Some years ago, he began a campaign against fraud and malpractice in the holiday homes market. None of my remarks is directed specifically against the timeshare concept. For many people, it is an attractive option, but I object to the hard-sell technique being employed to get people to the presentations.
As the House will know, timeshare means the right to use a flat or apartment usually for one or two weeks at the same time each year. Timeshare operates largely independently of laws, as the companies are owned through offshore trustee companies. I am advised that there is a high rate of bankruptcy among the companies and the knock-on effects are worrying for some of our constituents who enter into such agreements.
The concept of timeshare started back in 1974; but following scandals and bankruptcies in the United States of America, marketing companies moved to Iberia. Further to Mr. McMillan-Scott's amendment to the 1989 Garcia Amigo report on timeshare for the European Parliament, the Commission has introduced a mandatory seven-day cooling-off period in its draft unfair contract terms directive. I am glad to tell the House that that becomes effective on 3 April.
Mr. McMillan-Scott's advice to our constituents is well stated. He says that one should never take credit cards to a timeshare presentation, always ask to see copies of club constitutions and deeds of trust, and never be tempted, if one already has a timeshare, by offers to upgrade to a new development on promises that one's own will be easily sold, as that is seldom the reality.
People are advised never to pay more than £2,500 for a high-season week in Southern Spain, and never to forget 1088 that 30 per cent. of the whole cost of these timeshare schemes goes in commission to the salesmen engaged in presentations.
The Consumers Association contacted me today. It, too, is expressing concern about the aggressive and misleading marketing campaigns, the lack of cooling-off periods, spiralling maintenance costs, and problems with resale. The association has welcomed the report of the Director-General of Fair Trading, which was published last July, and supported its recommendations. However, it would like to see all contracts signed by United Kingdom residents made subject to the jurisdication of English courts. It certainly welcomed the Government's response to the report in February, with its proposal for amendment of the Trade Descriptions Act to cover award schemes and misstatements about services and accommodation facilities.
The International Property Owners Organisation has also made strong representations to me about the offshore trust that is to be set up by founder members of clubs. As the club is not the beneficial owner of the property, the trustees in most cases act as custodians of documents, and not within the provisions of acceptance of the word "trust" as recognised by most citizens.
The power of attorney is usually held by the man with the money, and is used to sell or mortgage the property. The organisation constantly receives distressing complaints, resulting directly from the marketing techniques of the very companies that I have described and it is clear that often inadequate counselling is given when crucially important decisions are being made about the investment of our constituents' hard earned money.
I hope that the Minister, in the short time that I have selfishly left to him, will be able to say something about why these letters originate in the United States of America, what is the likelihood of getting effective legislation to stop all this nonsense in the first place, and what is the likelihood that in two weeks' time my wife and I will become the proud winners of a new car, a new motor boat or a holiday abroad.
§ Mr. Conal Gregory (York)
I am mindful of the hour, but I wish to congratulate my hon. Friend the Member for Basildon (Mr. Amess) on raising the most important subject of timeshare. I echo my hon. Friend's praise of the hard work of the European Parliament Member for York, Mr. Edward McMillan-Scott, who has taken the matter up and put it on the books in Europe.
I hope that the Minister will say to what extent there will be safeguards for the British public, particularly in respect of the people to whom they should address their complaints. Is it recommended that complaints should go to the trading standards officers? A great many complaints are being received, and it is important that confidence should be restored. We do not want to see further auctions—perhaps the saddest auctions of all, involving those who have to sell their timeshare rights.
§ The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. Edward Leigh)
I am happy to echo the words of my hon. Friend the Member for York (Mr. Gregory) in praise of Edward McMillan-Scott, the MEP for York. As so many timeshare deals are 1089 located abroad, there is a large degree of competence for the European Community, and we shall urge the Community to act.
I must congratulate my hon. Friend the Member for Basildon (Mr. Amess) on drawing the attention of the House to the abuses that undoubtedly take place in the sale of timeshare properties, and on doing so in such a lively and entertaining manner. The way in which he described his own experience in a seedy establishment in Leicester square, where, instead of receiving the hoped-for Fiesta, he ended up with a plastic alarm clock, gripped the House.
Although I believe that those tactics are adopted by only a minority of companies, I fully share my hon. Friend's distaste for them and deplore both the deception involved in luring people to timeshare presentations by the offer of attractive-sounding gifts and the high-pressure sales tactics to which they are all too often subjected when they get there.
As my hon. Friends will be aware, we were sufficiently concerned by this problem to ask the Director General of Fair Trading to carry out a full review of the problems associated with timeshare. This he did, and his very full and thorough report was published in July of last year. As the report makes clear, it is necessary to keep the problem in perspective.
As I am sure my hon. Friends will accept, there is nothing wrong with timeshare as a concept. There are believed to be more than 200,000 timeshare owners in the United Kingdom, and available evidence suggests that most are perfectly happy with what they have bought. I would not want anyone to be discouraged from buying a timeshare from a reputable company by the dishonest sales methods of a few. Yet, as my hon. Friend has so eloquently made clear, those sales methods create a real problem. Indignant letters from people who have received letters from timeshare companies telling them that they have received an attractive-sounding award form the biggest single item in my mailbag as Minister responsible for consumer affairs. I have yet to receive letters from my hon. Friend the Member for Basildon, but he has made his point far more effectively in this forum, and we in the Department are grateful to him.
Although it is true that, as my hon. Friend said, award schemes of free gifts do not fall within the present scope of the Trade Descriptions Act 1968, purchasers of timeshare properties will, so far as United Kingdom law applies, enjoy the protection of the normal law of contract and of existing consumer protection legislation. The Trade Descriptions Act may not apply to award schemes, but it applies to other aspects of the sale of timeshare, and sellers of timeshare are also subject to the Control of Misleading Advertisements Regulations. So a purchaser or prospective purchaser has a remedy at law against deliberate deception or misrepresentation.
He has a remedy, too, if he finds that he has contracted to buy a property which does not correspond to the description given to him when he signed the contract. The Director General of Fair Trading has already invited and received from one timeshare company an undertaking that it would not publish further misleading advertisements. I 1090 am not sure whether that was the timeshare company about which my hon. Friend talked, but could not name for the present.
I emphasise these points, because the impression is sometimes given that the timeshare purchaser is always a helpless victim. This is by no means necessarily so. There is, however, one important qualification that I should make, and to which I shall return. I said that purchasers of timeshare properties would enjoy the protection of the normal law of contract and of existing consumer protection legislation so far as United Kingdom law applies. In many cases, it will not. A contract may be with a foreign developer or it may well be entered into abroad. This point is of particular concern to the European Community, and we shall raise it with the EC following the campaign that was started by Edward McMillan-Scott. Most timeshares are located abroad. United Kingdom legislation may be able to deal with sales abuses in the United Kingdom, but this is not enough to provide complete protection for United Kingdom timeshare owners.
My hon. Friend the Member for Basildon called for changes in the law to put a stop to these schemes, and it may help if I enlarge a little on this aspect. First, I do not think that it is the place of the law to put a stop to this or any other method of selling, provided it is conducted honestly and without misrepresentation. I am sure that my hon. Friend, who is also a believer in the traditional free market, will agree with that.
I quite take my hon. Friend's point that timeshare promotion schemes have sometimes been very far from honest. He gave some vivid examples. But it should in fairness be said that the schemes vary widely in their approach. Some make it clear that the addressee will be required to sit through a timeshare presentation in order to qualify for his or her gift, and it may be made clear too, that the gifts are not without strings. For example, if one has won a holiday in Florida, one will have to pay for the air fares. In that case, the schemes, although perhaps somewhat distasteful, are not something which, in a free society, we ought to be trying to ban. I am sure that my hon. Friend would agree. Other schemes are much less honest, and here I agree with my hon. Friend that the law needs to be strengthened—and we will strengthen it.
To a certain extent, the law already offers some control. Timeshare award schemes are subject, like any other commercial activity, to the law of misrepresentation and also to the regulations against misleading advertising. As I mentioned, the latter have been used successfully against one promoter, but there are undoubtedly gaps in the law. First and most obviously, there is the fact that the Trade Descriptions Act does not apply to award schemes of the type with which my hon. Friend dealt. We intend to remedy that gap as part of our general review of the Act which is now in progress. I hope that that will satisfy my hon. Friend.
So far, so good. My hon. Friend described the nuisance and deception involved in some award schemes, and we propose to act to prevent that. Perhaps it is worth my stressing once again that it is not award schemes as such that are objectionable—they are a legitimate, although not to my mind attractive, way of selling. What is objectionable is when they deliberately set out to deceive, either by making the recipient think that he has won 1091 something that he has not or by disguising the fact that the recipient will be required to sit through a possibly lengthy sales pitch before the award can be claimed.
The problem does not end there. People who attend these presentations are often subjected to perhaps several hours of heavy and persistent salesmanship—I am not sure whether that happened to my hon. Friend—for which they may be psychologically and even physically unprepared, unlike my hon. Friend. It is not easy to imagine the effect that those presentations may have on normally robust and intelligent people. I agree with my hon. Friend that we need to act and that the law should address award schemes.
Unfortunately, I have so little time in which to speak that I cannot spend as much time as I should have liked dealing with how we propose to act at European level. I shall approach my counterpart in the European Commission and ask him to institute the suggestions of the Director General of Fair Trading, especially the proposal for a cooling-off period. That is important. Most of the difficulties with timeshare arise because people are pressured into making an instant decision which they later regret.
More work must be done to ensure that there is a proper prospectus. Often a person hears about a vague concept of buying a place in the sun for his retirement, but there are few details about what he will get for the money that he hands over, often because of a high-pressure sale.
Although there is a certain amount that we can do, we must rely on the good sense of the people who go to 1092 presentations. Legislation and effective regulation by the industry can help them, but consumers must be prepared to look after themselves. They must be prepared to think about what they are offered.
My hon. Friend will go to the timeshare presentation in a week. If he does not want to buy, he should get up and leave. If, at the end of the presentation, he is pressed to sign a contract on the spot, he should refuse. If he is offered apparent benefits from signing on the spot, he should refuse. If he is interested but in doubt about what is on offer, he should ask for a prospectus and time to study it at leisure. But the House and I know that my hon. Friend's good sense is such that he will not walk away from such presentations without thinking carefully about what is on offer.
§ Mr. Speaker
I am now required to suspend the sitting until a message has been received from another place. The bells will be rung shortly before the sitting resumes.
§ Sitting suspended1.36 am
§ On resuming—
§ Mr. Speaker
A message has been received from another place as follows:The Lords have agreed to the Community Charges (General Reduction) Bill, without amendment.
§ Question put and agreed to.
§ Adjourned accordingly at twenty-three minutes to Two o'clock.