Implementation of the Consumer Protection Act: briefing by Department of Trade and Industry

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Trade and Industry

13 October 2010
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The Department of Trade and Industry presented its progress on the implementation of the Consumer Protection Act. The presentation was divided into four parts which covered Background on Policy Reform, Overview of the Consumer Protection Act and Establishment of the National Consumer Commission and Status of Implementation of the Act. As part of the process, the Department had carried out an International Legislative Benchmarking Study. This had reviewed laws, models and mechanisms of several jurisdictions which included Argentina, Brazil, Chile, India, UK, Finland, Australia, Ghana, Botswana and Canada .This study revealed that most jurisdictions had one comprehensive law as it provided uniformity and certainty due to clear and upfront rules of conduct. The Department had also carried out a National Consumer Survey and review of consumer protection measures in South Africa. In addition, 70 Acts were reviewed that provide consumer protection in various fields. Findings of this review showed that there was no statute in South Africa that contained a clear statement on consumer rights and certain aspects of the purchasing cycle were unregulated and were left to common law leaving consumers and small business vulnerable.

The Committee was informed that the general implementation date had been postponed in terms of Schedule 2 item 3 of the Act which allowed the Minister to defer the effective date of any provision by six additional months. The Act would now be effected on 1 April 2011 and regulations to give effect to the Act were being finalised and would published for comments by the end of October 2010. The process for establishing the National Consumer Commission was on track. The process to appoint the Commissioner and Deputy Commissioner had commenced and the process in accordance to Section 87 which required consultation with the Committee and Minister had been initiated.

Members expressed concern that the issue of consumer protection was long overdue so further delay should not have happened. They also expressed worry about the lack of readiness of provinces and asked if the Consumer Protection Act would address the issue of businesses continuing to debit individuals even after the initial period of the contract had elapsed. They further asked if the Act applied to the government as some of the services outlined such as electricity and water were supplied by municipalities. Another question worth noting was how other Acts such as the Water Act converged into the Consumer Protection Act.

Meeting report

Chairperson's Introductory Remarks
The Chairperson welcomed members of the Committee and the entourage form the Department of Trade and Industry. The Committee had been eagerly looking forward to the presentation by the Department.

Department of Trade and Industry (DTI) Briefing
Ms Zodwa Ntuli, Deputy Director General; Consumer and Corporate Regulation Division, DTI, presented the Department’s progress on the implementation of the Consumer Protection Act. The presentation was divided into four parts which covered background on policy reform, overview of the Consumer Protection Act and establishment of the National Consumer Commission and status of Implementation of the Act. In the first part of the briefing on the background on policy reform the Committee was informed that the Department had carried out an International Legislative Benchmarking Study. This had reviewed laws, models and mechanisms of several jurisdictions which included Argentina, Brazil, Chile, India, UK, Finland, Australia, Ghana, Botswana and Canada .This study revealed that most jurisdictions had one comprehensive law as it provided uniformity and certainty due to clear and upfront rules of conduct. Also as part of the background preparation the Department had carried out a South African National Consumer Survey and review of consumer protection measures in South Africa. As part of the review, 70 Acts were reviewed that provide consumer protection in various fields. Findings of this review showed that there was no statute in South Africa that contained a clear statement on consumer rights and certain aspects of the purchasing cycle were unregulated and were left to common law leaving consumers and small business vulnerable. Other findings reviewed that they were growing incidences of scams and unfair practices and that the last review of consumer affairs was in 1988 when the Unfair Business Practices Act was introduced. 

The second part of the briefing on the overview of the Consumer Protection Act was presented by Ms Nomfundo Maseti, Chief Director; Policy and Legislation, Department of Trade and Industry and this covered Objectives of the Act, Consumer Rights, Institutional Arrangement, Functions of the Commission and Role of Provincial Authorities. The Committee was informed that the objectives of the Act were to promote a fair, efficient and transparent market place for consumer and business, provide access to effective consumer redress for economic citizens and among other things harmonise consumer protection framework with international best practice. The new Act adopted a rights based approach with an emphasis on consumer rights such as right to equality in the consumer market, right to privacy, right to choice, right to fair and responsible marketing and among other rights the right to fair value, good quality and safety.

Ms Maseti highlighted the role of provincial consumer protection authorities which had jurisdiction within provinces. These authorities would issue compliance notices in terms of the Act on behalf of the Commission to any person carrying out business exclusively within that province, facilitate the mediation of the dispute arising in terms of the Act between or among persons resident, or carrying out business exclusively within that province and among other things request the Commission to initiate a complaint in respect of any apparent prohibited conduct or offence in terms of the Act arising within that province.

Ms Ntuli continued with the third part of the briefing which covered establishment of the National Consumer Commission. In setting up the National Consumer Commission the Department had carried out an institutional comparative study in three counties which included Australia, New Zealand and Hong Kong. The study focused on technology used, number of complaints handled, contact centre, structure and budget.

The assessment of the state of readiness of provinces was a consultative process which dealt with annual budgets allocated for protection, rank of official in charge of consumer protection, total staff complements, existence of the consumer court, legislation in effect, number of complaints dealt with and the nature of the system used to process complaints. The finding revealed that there was need to enhance capacity within provinces. A presentation on the findings and appeal for political support on consumer protection would be made to the Ministers and Members of Executive Councils (MINMEC) structure on 14 October 2010.

The general implementation date had been postponed in terms of Schedule 2 item 3 of the Act which allowed the Minister of Trade and Industry to defer the effective date of any provision by six additional months. The Act would now be effected on 1 April 2011 and regulations to give effect to the Act were being finalised and would published for comments by the end of October 2010. The process for establishing the National Consumer Commission was on track. The process to appoint the Commissioner and Deputy Commissioner had commenced and the process in accordance to Section 87 which required consultation with the Portfolio Committee and Minister had been initiated.

Discussion

Mr B Radebe (ANC) said that the issue of consumer protection was long overdue so further delay should not have happened. Consumer protection was needed urgently. It was important to address the issue of contracts as businesses tended to include a fine print within contracts which they got away with.

Mr Radebe said that he was worried that provinces were not ready as all but two were using a manual system. Some of the provinces had no consumer courts and were managed by senior managers

Ms Maseti replied that the consumer courts in some provinces were not functioning but their status would be clarified after the MINMEC meeting to be held on 14 October 2010.

Mr N Gcwabaza (ANC) observed that individuals who entered into contract with businesses continued to be debited even after the initial period of the contract had elapsed. Would the consumer protection act address this issue?

Ms Maseti replied that Section 14 of the Act talked about fixed term contract and this was one of the areas where the study had revealed that people were concerned about the renewals without notification. There would not be any renewal of contracts without a 20 day notification period before expiry and in the event that the consumer did not respond the contract would only be extended for an initial one month period.

Mr Gcwabaza asked if the Department was looking at improving staff compliments as one of the studies had shown that other countries had smaller populations but with a higher staff complement than South Africa.

Ms Ntuli replied that the gap was being addressed and capacity had been increased from the time of initial reporting to 100 staff members.

Mr Gcwabaza asked why some provinces had not established consumer courts.

Ms Ntuli replied that the picture presented to the Committee was a true reflection of the situation. Gaps had been identified in order to make a proposal to provinces for a decision and this process would be done at the MINMEC meeting.

Ms F Khumalo (ANC) said that there was need for further public awareness with regard to the Consumer Protection Act

Ms Maseti replied that the Department had last year started rolling out education campaigns. There were adverts on television and radio that informed people about their rights but more needed to be done.

Ms Khumalo asked if there was an inspectorate to enforce any violation of the Act.

Ms Maseti replied that the Act provided for the appointment of inspectors and that there would be inspectors. The inspectors would be able to carry out search and seizures.

Mr T Harris (DA) asked when the Minister would publish the threshold for juristic persons.

Ms Maseti replied that the Minister had already published the notice for the threshold.

Ms C September (ANC) asked if the Act applied to the government as some of the goods outlined such as electricity and water were supplied by municipalities. How ready was the government and what recourse was there for the community?

Ms Maseti replied that if an organ of the state was a supplier of services it would be subject to the Act. For instance the consumer would be able to take up a matter against a municipality and the Commission was empowered to monitor service delivery of organs of state. An exemption had been received from the Minister of Cooperative Governance and Traditional Affairs for some of the municipalities. The Act had that provision in recognition of the lack of capacity of some of the small municipalities but that this would be a transitional provision with a specified duration which would be determined case by case.

Ms September asked how the public awareness campaigns would be rolled out to the citizenry.

Ms Ntuli replied that campaigns had stated since 2008 and the approach had been to reach as many people as possible through publications and where possible through public meetings.

Ms September asked how other Acts such as the Water Act converged into the Consumer Protection Act.  

Ms Maseti replied that where the Consumer Protection Act provided a higher protection to consumers in so far as legislation that existed the legislation would apply concurrently. Where existing legislation provided higher protection such as in the health sector, the Consumer Protection Act and the other Act would compliment each other and the Consumer Protection Act would only come in to address issues of recourse. 

Ms Khumalo asked why there was no consumer court in Kwa-Zulu Natal and also why the legislation was still in the draft form.

Ms Maseti repeated that these gaps would be tabled to the provinces for decision and this process would be done at the MINMEC meeting.

Ms September said that the idea of government departments requesting for an exemption from the Consumer Protection Act was in conflict with the Bill of Rights as government had an obligation to provide services.

Ms Ntuli said that the Department agreed with this view. However, the exemptions would be for a fixed duration and not for a blanket period, just up until the time when municipalities had restored their capacity.

The Chairperson thanked the Department for the informative presentation.

The meeting was adjourned.

 

 

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