§ Mr. OppenheimTo ask the Secretary of State for Trade and Industry whether he will introduce new pyramid selling scheme regulations to replace the 1973 regulations.
§ Mr. ForthI have today laid the Pyramid Selling Schemes Regulations 1989, under the Fair Trading Act 1973, which will come into operation on 1 March 1990.
349WThe new regulations are designed to ensure that no one will be able to participate in a pyramid selling, or multi-level marketing scheme, without having first signed a contract which sets out their rights and includes a statutory warning about such schemes.
The promoters of the scheme will be required to set out in the contract details of when the scheme started in the United Kingdom and where it is operated from as well as descriptions of the goods or services on offer. They will also have to specify in the contract that the participant may withdraw from the scheme without penalty within 14 days of first signing and set out the participant's rights should he subsequently wish to withdraw.
The regulations also prohibit promoters from accepting more than £75 from participants within the first seven days. They set an upper limit of £30 as payment for participants recruiting others. There are also provisions relating to payments for training facilities and deposits.
In making these regulations I have focused on enabling a prospective participant to make an informed choice when considering whether to join the scheme.
These regulations do not cover the content of advertisements, notices, prospectuses and circulars which do not state the financial benefits of joining a scheme, or which may appear in the press or as handouts. These remain, quite properly, subject to the Advertising Standards Authority's code of practice.
Copies of the regulations have been placed in the Libraries of both Houses of Parliament.