HL Deb 04 March 1975 vol 357 cc1235-40

4.58 p.m.


My Lords, I beg to move that this Bill be now read a second time. This is a short Bill, limited in scope, and it is the ideal sort of Bill for a Back Bencher. It was introduced in another place by my honourable friend and erstwhile colleague at the Department of Trade and Industry, Mr. Anthony Grant. The 1971 Act, which it amends, was introduced by my honourable friend Mr. Philip Goodhart, and that Act was an improved version of a Bill presented and carried through in another place by Mr. Arthur Davidson and which was a casualty in the 1970 General Election. There is no doubt, therefore, that legislation on these lines has the support of all Parties in the other place, and I trust that it will have the support of all Parties in your Lordships' House as well. I should add that the Government have given all possible assistance in preparing this Bill and in consulting representatives of interests— that is. legitimate interests—mainly concerned.

The purpose of the Bill is to amend the provisions of the Unsolicited Goods and Services Act 1971 which deal with directory entries. Those provisions were intended to stop the practice of sending by post, or otherwise, what appeared to be invoices in respect of entries in directories, with the object of deceiving the recipients into paying for such entries in the belief that an obligation to pay had already been incurred, although no order for such an entry had been given. Unfortunately, the provisions have not succeeded in stamping out this abuse and there is a good deal of evidence that it continues to be widely practised. It worries the police and it damages the good name of honest publishers.

There are several ways in which the deception is practised. The most common are these. What appears to be an extract from a directory which has already been published may be sent—a voucher copy, as it were—together with a demand for payment. Sometimes the entry has been included, unordered and unwanted; sometimes no such entry has appeared, or indeed it may never appear; or an entry may be sent, apparently for verification, together with an invoice. In any such case the seeming invoice may be passed for payment without checking whether the entry was ever ordered. Some of your Lordships may think that if a firm's control system is as lax as that, it has only itself to blame if it pays bills for services which have not been rendered or even ordered, and which are practically worthless anyhow when they are rendered The fact remains, however, that those who play these tricks are wily and get away with substantial sums of money. More-over, it is small businesses which are most vulnerable to this kind of deception.

For these reasons, the 1971 Act pro-vides that no one need pay for an entry which has been included, or is to be included, in a directory unless he, or someone on his behalf, signed an order for it on his own regular order form or business stationery, or signed a note of agreement complying with certain requirements laid down in Section 3 of the Act. That states that any person who demands payment or asserts a right to payment, without having complied with the requirements of the Act, commits an offence and is liable to a fine not exceeding £400.

A person is regarded as asserting a right to payment if he sends an invoice or similar document which shows the amount payable for the service, and does not state as least as prominently as the amount that no claim is made to payment. But these provisions have proved inadequate for two reasons. First, this concept of prominence of the statement that no claim is made for payment is not precise. The people who run these bogus directories still send out documents in the form of invoices in which the statements required by the Act are deliberately printed in such a way that they are likely to be overlooked by a proportion of the recipients. I am informed that there have been over 900 of these complaints received by the Department since the Act came into effect. Secondly, the penalties which have been imposed where prosecutions have proceeded have tended to be quite small and seriously out of proportion to the proceeds of the fraud.

This Bill has two main objects. The first is to ensure that disclaimers are so conspicuous that they cannot be overlooked, and to tighten up the note of agreement provision which must be complied with before a demand for payment can legally be made. It is proposed to do this by amending that part of Section 3(3) of the Act which lays down the requirement, and substituting a power to make regulations about the content and form of notices, agreements, invoices and similar documents. In addition, it is proposed in Clause 2(2) to replace Section 6(2) of the Act, which relates 10 the prominence of the disclaimer, with the requirement that any invoice or the like must comply with the regulations. Clauses 1 and 2 will enable the Secretary of State not only to lay down precise requirements with which documents must comply, but also to differentiate between various classes of documents and various circumstances so as to reduce to a minimum any inconvenience to reputable bodies. They will also enable him to change the regulations should an artful dodger find a loophole through which to extract money from the unwary.

The second main objective is to provide a stronger deterrent. The police have told us that the director of one firm, not a United Kingdom citizen, I may add, got away with about £250,000. In such cases a fine of £400 is plainly derisory—I call it piffling. So Clause 3. while retaining the maximum fine of £400 on summary conviction, provides no limit to the amount of the fine for a person convicted on indictment. If your Lordships pass this Bill this clause will come into operation immediately it receives the Royal Assent, although it will apply only to offences committed after the Bill becomes law. Clause 1, which gives the power to make regulations, will also come into operation on the passing of the Bill.

It is not expected that the regulations will take long to draft. Clause 2, which amends Section 3(3) and Section 6(2) of the 1971 Act, will come into effect on such date, or dates, as the Secretary of State may appoint by order. The regulations made under Clause 1 can then be brought into force. Meantime, until those regulations are brought into force, the existing provisions of the 1971 Act will continue to have effect. My Lords, I hope that this Bill will receive your Lordships' assent and that it will be proved successful in putting a stop to what is a very unpleasant form of fraud. I beg to move.

Moved, That the Bill be now read 2a.— (Lord Drumalbyn.)

5.5 p.m.


My Lords, we have had a very clear and complete exposition of this Bill by the noble Lord, Lord Drumalbyn. Therefore it only remains for me to say that I support it and that I feel it is an intolerable situation if we have brought in legislation which is being flouted by deceitful people to the extent which is apparent. I hope that this Bill will be given a very rapid passage through this House and that the provision for increasing the penalties will not be altered during its stages. We must remember today that, in many cases, penalties—and this, I think, is a good example—are quite inadequate to act as a deterrent.

5.6 p.m.


My Lords, I have pleasure in supporting the noble Lord in his quest to remove the mischief which is being caused by unethical directory publishers in sending out invoices which firms can so easily be deceived into paying. The sponsor of this Bill in another place announced that the Department had received over 800 complaints since the Act was passed in 1971. This figure has now increased to 950–100 from the beginning of the present year. A matter which has caused a great deal of concern is the practice of sending invoices from overseas, usually without even a small print disclaimer. Even though this may constitute an offence in the United Kingdom, our legislation is no deterrent unless prosecutions can be brought. This is impossible, unless the operators come to the United Kingdom. The only effective solution is to persuade other countries to introduce similar legislation to our own, and this the Government will seek to do. It will, of course, take time to achieve this and, in the meantime, firms in this country must be increasingly vigilant in checking any overseas invoices.

The House will wish me to say something about the Government's intentions regarding regulations. The object of the regulations laying down the requirements for invoices and similar documents will be to ensure that in future any invoice for an unordered entry will bear a disclaimer so conspicuous that the recipient cannot overlook it and be deceived into paying. The intention, therefore, is to lay down a detailed specification for the form of disclaimer which must appear. We have it in mind that this would be along these lines: first, in the top left-hand corner of the document the following words would appear in a specified colour and type-size: "This is not a demand for payment. There is no obligation to pay the charge shown." In addition, the words, "This is not an invoice" will have to be printed diagonally across the face of the document, also in a specified colour and in a type-size larger than any other type appearing on the invoice. These requirements will, of course, not apply to invoices sent out by reputable publishers demanding payment for an entry which has been properly ordered.

The main purpose of the regulations relating to notes of agreement will be to ensure that the firm is not deceived into signing a valid order and so becomes liable to pay for an unwanted entry. We intend to achieve this by requiring that a specified warning is printed on the face of the note of agreement to alert the reader to the consequences of signing the document. We shall also require specified information about the directory to appear, broadly along the lines of the requirements of the 1971 Act. We shall draw up these regulations in the light of consultations already under way with interested parties, including reputable directory publishers and the Post Office. We do not want to cause legitimate publishers unnecessary difficulties in the conduct of their business. To meet their needs we shall do everything possible, consistent with the objective of preventing practices which deceive the public. It is in the interests of reputable publishers that those who are disreputable should be eliminated from the market.

Public Corporation Relative Consumer Body When Established
National Coal Board Domestic Coal Consumers' Council. First chairman appointed in July 1947 under the Coal Industry Nationalisation Act 1946.

5.11 p.m.


My Lords, I should like to thank the noble Viscount, Lord Hanworth, for his support and also, in particular, the noble Lord, Lord Jacques, for his response to this Bill. It must be plain to your Lordships that I was not exaggerating when I said that Mr. Anthony Grant who introduced this Bill had all possible support and assistance from the Department Your Lordships will have noted that the Department have already taken many steps to bring this Bill into operation, to get regulations prepared and to consult with various parties. I think that the extent to which the Department have assisted must be almost unprecedented. All I can say is that this is an excellent augury for the Bill and for its success, and I hope very much that your Lordships will give it a very speedy passage. I should again like to thank the noble Lord, Lord Jacques, and the Department for their courtesy.

On Question, Bill read 2a, and committed to a Committee of the Whole House.