National Consumer Tribunal Annual Report 2009/10: briefing; Budgetary Review and Recommendations Report template: briefing

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Trade, Industry and Competition

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

The National Consumer Tribunal briefed the Committee on its Annual Report. The Tribunal’s work was very dependant on cases being filed. Its caseload had increased by 1776% and in particular there had been an 11250% increase in consent orders brought before it. All its 181 cases had been adjudicated. It had asked for and received a 10% increase in its Medium Term Economic Framework budget. 85% of business plan activities had been met. A Service Charter Conference had been held. The Tribunal had received an unqualified audit opinion since its inception three years previously. Great emphasis had been placed on good corporate governance, development and implementation of policies, procedures and systems. Judgements had created greater certainty through the setting of precedent. Circuit court hearings had increased accessibility. Interactive sessions with provincial offices would result in a more consistent regulatory framework. The total amount available in its budget was R20.4 million, including a surplus of R2.7 million brought forward from the previous year. Total expenditure was R18.1 million leaving an unspent balance of R2.3 million.

Challenges facing the Tribunal were an inadequate organisational structure as it had a staff complement of nine who had to cover multiple roles. It was seeking to increase the number of staff members to 20 to reduce the need for outside contractors. There was a high level of staff turnover as there had been no increase in remuneration since 2006. The Tribunal was in discussion with the Department of Trade and Industry about this. There was inadequate information technology infrastructure and high downtime. Additional Tribunal members were needed to fulfil functions once the new Consumer Protection Act came into force and also because some Tribunal members had resigned.

Members questioned whether the townships were aware of the existence of the Tribunal and whether they utilised its services. Members asked what the procedure was to bring a case to the Tribunal, how cases the Tribunal had won could benefit others in a similar predicament, how many languages did the Tribunal utilise, what the relationship between the Tribunal, the Ombudsman and the Courts was, if the Consumer Protection Act benefits, to be introduced in April 2011, could be applied currently, if outstanding projects were hamstrung by costs, and for clarification on provincial offices. Members also asked if any survey had been done to anticipate the increase in workload, why there were 250 uncompleted cases, why the Tribunal did not have national campaigns in conjunction with the National Credit Regulator, whether the Tribunal had talked with the mass media like the South African Broadcasting Corporation, what the ideal staff complement was, about the distinction between the role of the Tribunal and that of the provincial offices, if the Tribunal had considered sharing services with other entities, what effect the economic meltdown had had on the Tribunal and how it had they dealt with it, and if the Tribunal had learned from the experiences of other tribunals.

Meeting report

National Consumer Tribunal Briefing
Ms Hazel Devraj, Chief Executive Officer (CEO) and Registrar, National Consumer Tribunal (NCT), outlined the Tribunal's history, structures and operations. The Chairperson fulfilled the role of the accounting authority and the Minister of Trade and Industry the role of the executive authority. As CEO Ms Devraj was responsible for operations and as the Registrar she was responsible for cases being properly filed and finalised.  She also filled the role of Chief Financial Officer (CFO).

The Tribunal had aligned itself with the Department of Trade and Industry (DTI)’s strategic goal of promoting broader participation in the economy. The Tribunal’s work was very dependant on cases being filed. The Tribunal had provided redress in the case of Mapeka vs Wesbank and in the case of Dumas vs Motor Finance Corporation in 2008/09. A second case against the latter had been settled outside of the Tribunal. The Tribunal's activities had led to the de-registration of two debt relief counsellors with a further two under review. The de-registration of Frabert Trading as Cashure in the Upington region had had a positive impact on vulnerable consumers.

There had been an 11250% increase in consent orders, where consumers were allowed to restructure their debt while the other party was guaranteed repayment of monies. The Tribunal had anticipated a 10% increase in cases yet its caseload had increased by 1776%. It had held seven introductory sessions in the provinces and held seven circuit court hearings. Eight information pieces had been issued and a video about the work of the NCT had been developed and three rural and one urban event had been held. Two research papers on procedural and substantive issues had been written. The Tribunal had held six joint education programmes with the provincial offices. None of its decisions had been overturned on review or appeal. It had held four workshops for its members and nine papers had been written. Members of the Tribunal had visited Australia and New Zealand to be exposed to international standards. The Tribunal had asked for and received a 10% increase in its budget in the MTEF budget. All of its 181 cases had been adjudicated - 159 within two weeks of the close of pleading, and the rest within four weeks.

The challenges facing the Tribunal included an inadequate organisational structure; it had a staff complement of only nine. It was seeking to increase staff and reduce the need for outside contractors. There was also a high level of staff turnover. There had been no increase in remuneration since 2006. It was in discussion with the DTI about this. There was inadequate information technology (IT) infrastructure and high IT downtime. Additional Tribunal members were needed to fulfil functions once the new Consumer Protection Act came into force and also because some Tribunal members had resigned.

Among its achievements, the Tribunal had held a service charter conference with its stakeholders. It had received an unqualified audit ever since its inception, three years previously. Judgements awarded had created greater certainty and set a precedent.

 

The Tribunal's available budget had been R20.4 million including a surplus of R2.7 million brought forward from the previous year. Expenditure was R18.1 million leaving an unspent balance of R2.3 million. The latter was in case of remuneration adjustments. Expenditure trends showed possible extra staff costs, travel and subsistence for hearings and compliance costs.

However, according to the audit report findings the indicators were not accurate. Ms Devraj explained that there was a rigorous process of collating and verifying documents and the Auditor and the Tribunal had had differing interpretations as to when pleadings closed; and there was a need to reach a common understanding.

The Tribunal was looking forward to April 2011 when the new Consumer Protection Act was to be implemented. There would be interpretative challenges but the Tribunal was ready and able to adjudicate on its extended mandate.

Discussion
Mr X Mabasa (ANC) asked if the townships were aware of the existence of the NCT and whether they utilised its services. What was the procedure to bring a case to the NCT? How could cases the NCT had won benefit others in a similar predicament? How many languages did the NCT utilise. What was the relationship between the Tribunal, the Ombudsman and the Courts? Could the Consumer Protection Act (CPA), to be introduced in April 2011, be applied to a case currently?

Mr J Smalle (DA) asked how the CPA would impact outstanding cases. Could the NCT clarify what was meant by provincial offices? How many people were seen and trained on the seven provincial trips and circuit court visits? Were outstanding projects hamstrung by costs?

Mr S Njikelana (ANC) asked if any survey had been done to anticipate the increase in workload and why there were 250 uncompleted cases. Why did the Tribunal not have national campaigns in conjunction with the National Credit Regulator (NCR)? Had the Tribunal approached the mass media like the SABC? What was the ideal staff complement? What was the distinction between the Tribunal and the provincial offices? Had it considered sharing services with other entities? 

Ms C September (ANC) asked what effect the economic meltdown had had on the organisation, how it had dealt with it, and if the Tribunal had learned from the experiences of other tribunals.

Ms Diane Terblanche, Chairperson, NCT, replied that it was a sad reality that it was not getting its message across to poor rural people as it had an adjudicative function; it was not a front line agency and the National Credit Regulator should include information about the Tribunal information in its campaigns. In its rural outreach programmes the Tribunal had soon realised the need to work with and through the rural structures. She acknowledged that language was a barrier as only English was used; however in the adjudication process consumers had a right to an interpreter or translator at the Tribunal's expense. It was marketing itself well with key stakeholders namely provincial consumer affairs officers as per its marketing strategy. The Constitution provided concurrent jurisdiction on consumer affairs between the Tribunal, the National Credit Regulator, provincial consumer affairs courts and the National Consumer Commission.
 
Ms Devraj said that the Tribunal did not have provincial offices. 20 internal people and five provincial officers and five court officials had attended workshops. It was important to manage the expectations of consumers filing cases. Most of its cases were referrals from provincial offices or the NCR where an attempt was made to resolve issues. The procedure then was that an application form was filled in together with a processing fee of R100 or R50. One of the amendments it was seeking was that the application fee be waived. At present the Chairperson had the right to waive fees.

Ms Terblanche said the NCT had tried to interest the press in its victories. Consumers were being overcharged and when they could not pay, interest was being reduced to the legal maximum limit. She was concerned that a number of people were being overcharged at illegal interest rates and there was no redress for them. The Tribunal had pointed out cases to the Regulator when cases like these had come to its attention. The Ombudsman allowed for an alternate dispute resolution process and when that failed the Tribunal got involved. Anybody could go directly to the courts, without first approaching the Tribunal. It was just that the Tribunal allowed them to do so at no cost and represented the parties throughout the process.  The NCT would hear cases under the CPA act only from April 2011 although there was a strict liability for safe products clause, which could be heard currently.

Regarding the economic context raised by Ms September, Ms Terblanche said that the economic conditions had driven the case numbers to increase in the way that they had for consent orders and for interim debt relief orders.

Ms September asked if the NCT made contact with the relevant groups inside and outside the Department to make it aware of these trends.

Ms Devraj replied that NCT reported quarterly to the Department and made it aware in the reports and in unofficial discussions.

Regarding the comment that the Tribunal just sat in a corner gathering dust, Ms Terblanche said that it was important that people knew what cases the Tribunal was working on so that they could also bring their own particular cases forward. It was important that the Tribunal take its role very seriously.

The NCT had consciously looked at how it could reduce the use of contract work. It was considering a staff complement of 20 which included staff needed for the extended mandate of the CPA. This must still be approved by the DTI. NCT was considering a possible sharing of services with the National Consumer    Commission. Outstanding projects were still being finalised. There were 250 outstanding cases. NCT could not take a case forward until the applicant gave all the relevant documentation. It had developed a guideline document to facilitate this process. NCT was a small organisation with a staff of nine yet the Public Finance Management Act (PFMA) placed a burden on it financially; for example, it had to employ a CFO.

Ms Terblanche added that NCT had to comply with 45 pieces of policy legislation and 10 to 15 compliance requirements. In addition it had monthly, quarterly and end of year reporting. The cost of compliance as a percentage of the budget was large.

Mr J Smalle asked if the NCT had considered extending the response time required from the current three days. Did the Tribunal deal with the Saambou / FNB cases?

Ms Terblanche replied that the Regulator had also said that the NCT should extend the time from the current three days but Ms Terblanche's position was that it should remain at three days, as people needed a quick resolution.  Her view was that the Tribunal should not become a big organisation, and should not work from a central office, but should rather work through the provincial offices. The Regulator would have dealt with the Saambou / FNB cases.

Ms Devraj added that NCT already had over 500 cases and that it was considering law students or interns to assist it.

Ms Terblanche said that consumers were stressed by debt and needed certainty one way or the other quickly; lawyers were too expensive an option.

Budgetary Review and Recommendations Report: briefing on report template
A member of the Committee staff briefly reviewed the template, which had been developed by the Finance cluster, of what the Committee's Budgetary Review and Recommendations Report (BRRR) should contain. The BRRR related to Section 5 of the Money Bills Amendment Procedure and Related Matters Act 2009 (Act No. 9 of 2009) in which the National Assembly through its committees needed to assess the performance of each national department and allowed the committee concerned the opportunity to recommend other or extra uses of the money allocated to the department of which the committee had oversight. To this end the departmental annual reports should be made available earlier (in August). The Committee needed to consider the reports of the Standing Committee on Public Accounts (SCOPA) to verify wasteful and irregular expenditure and overspending.  The Committee therefore should prioritise the Department rather than the Department’s entities. The report should include the Committee’s observations, its conclusions and recommendations and make a clear statement whether it accepted the Department's report.

Ms September noted that the cycle to which the Department worked was not the one that the Committee worked to and was not the same as Parliament's.

Various recommendations on the composition of a subcommittee were discussed until the Acting Chairperson reminded Members that, for want of a quorum, it would not be possible to adopt any resolutions.

Consideration and adoption of minutes

For the same reason, no minutes of previous meetings were considered for adoption.

The meeting was adjourned.


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