Report 66 Business Practices Committee

On 21 January 1998 the Business Practices Committee (1) (the Committee) received a letter from the South African Reserve Bank (SARB). The letter stated that the bank received an enquiry from a consumer about Omega Trust (Omega) but that there appeared to be no clear indication of a possible contravention of the Banks Act, 1990 (Act No 94 of 1990). The SARB added that the Committee might consider investigating the activities of Omega.

As far back as 29 April 1997 the SARB, via the Registrar of Banks, addressed a letter to the attorney of Omega. The Registrar inter alia wrote:

"Kindly note that Omega Trust does not fall within the meaning of "any other institution or body" as envisaged in section 2(vii) of the Banks Act, 1990 (Act No 94 of 1990 - "the Act"). We are therefore unfortunately unable to adhere to your request that Omega Trust be exempted in terms of section 2(vii) of the Act.

This Office does not intend to prevent bona fide multi-level marketing programmes from operating in the Republic of South Africa. Multi-level marketing programmes may be described as any marketing strategy in which participants obtain the right to recruit additional participants, or to have additional participants placed by the promotor or any other person into the program participant's program grouping, in order to sell goods and to receive money; provided that the payments received by program participants are derived primarily from the sale or purchase of goods or services, and not from recruiting additional participants nor for having additional participants placed into the program participant's program grouping.

Having regard to the information submitted to this Office in respect of your client's proposed business we are not convinced that the proposed business of Omega Trust falls within the meaning of a bona fide multi-level marketing programme". (Own underlining).