§ Mrs. Sally Oppenheimasked the Secretary of State for Trade and Industry whether he has formulated proposals for dealing with pyramid selling; and if he will make a statement.
§ Sir G. HoweMy right hon. and noble Friend the Minister without Portfolio has today tabled in another place as amendments to the Fair Trading Bill proposals for dealing with pyramid selling.
In the consultative document circulated on 29th March it was proposed that a ban should be imposed on the objectionable features of pyramid selling schemes. These were defined essentially as payment by franchise holders for their rights under the schemes and payments of franchise holders for recruiting further participants.
We have received much helpful comment on the document. This and evidence of superficial changes in the structure of some pyramid selling schemes which would have placed them outside the definition set out in the consultative document and hence not subject to any new measures based upon it have made it clear that wider and more flexible powers are needed to deal with the objectionable features of the practice.
290WA wider definition of trading schemes which should be subject to the legislation is now proposed. In effect it covers schemes in which goods or services are provided by promoters to participants for sale otherwise than from business premises and in which participants are offered the prospect of reward for recruiting others or as the result of activities of others. The principal offence will be as proposed in the consultative documents: the taking of payment by promoters or participants from a new participant in respect of the right to benefit from the recruitment of others.
It is also intended that, for the purpose of preventing unfair treatment of the participants, the Secretary of State shall have power to regulate the promotion and working of such schemes. Contravention of the regulations will be an offence.