South African Post Office Bill [B2-2010]: adoption; National Consumer Commission briefing on the Role it Plays in the Country

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14 June 2011
Chairperson: Mr S Kholwane (ANC)
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Meeting Summary

The Committee adopted the South African Post Office Bill with no concerns raised by Members. The Committee decided that there would be a short debate in the House on the Bill.

The National Consumer Commission briefing touched on its policy objectives, the Consumer Protection Act, the right to restrict unwanted direct marketing, and examples of misleading and deceptive marketing. The Committee noted there was a lot of false advertising happening in the country, specifically when it came to the medicinal and pharmaceutical sectors. Many people, especially the poor, were susceptible to this so what was the Commission doing about this. A complaint was made about the millions lost to white collar crime by the private sector who got away with this, while the public sector was always being criticised for its corruption. A complaint was raised about people unsuspectingly being given generic medications instead of the prescribed original product. More clarity was requested about the definition of “consumer”, how ordinary South Africans could access the Commission, how visible it was to the public, and if it was utilising community media to communicate its message to the public.

The Committee shared recommendations with the Commission that it had compiled based on briefings received from the Advertising Standards Authority of South Africa (ASA), the Association of Communication and Advertising (ACA) and the Media Development and Diversity Agency (MDDA) the previous day.

Meeting report

South African Post Office Bill: finalisation
The Chairperson informed the Committee that they would be adopting the Bill clause by clause.

There were no concerns raised by Members. Rev K Zondi (IFP) moved for the adoption of the Bill. Ms R Morutoa (ANC) seconded the adoption.

The Chairperson informed the Committee that the Bill had been adopted formally. He read out the Report of the Portfolio Committee on Communications, which said that the Committee had considered the Bill and adopted it with amendments. He noted there was one more issue to discuss. Members had to decide whether they wanted to debate the Bill in the House or if it would go to the House in the form of a report. He noted that the DA and COPE were absent from the meeting, but he wanted the IFP and ANC’s opinion.

Ms N Magazi (ANC) suggested that there just be a report in the House, but that the Chairperson should consult the leaders of the other political parties.

Ms Morutoa thought that the Committee should debate the Bill. Rev Zondi agreed.

Mr C Kekane (ANC) pointed out that there was a quorum and the Committee could take a decision without having to consult the absent parties.

The Chairperson noted that the Committee’s decision was that a short debate would be held in the House. 

National Consumer Commission (NCC) briefing
Ms Mamadupi Mohlala, NCC Commissioner, informed the Committee that the NCC was established by the Consumer Protection Act as an organ of state within the public administration, but as an institution outside the public service. The NCC had to exercise the functions assigned to it in terms of the Act in the most cost-efficient and effective manner.

The NCC had the responsibility to enforce the Act by initiating complaints on systemic issues affecting consumers, investigating complaints referred by consumers, issuing compliance notices, negotiating settlement of complaints, referring matters to the Tribunal for adjudication and to the Equality Court, accreditation of industry codes, monitoring of accredited institutions, conducting research, and ensuring public awareness. The NCC’s policy objectives consisted of promoting a fair and transparent market place, providing an effective regulatory framework that fosters consumer confidence, and promoting better customer service in the public and private sector.

The Consumer Protection Act (CPA) applied to suppliers that promote or supply goods or services to consumers, government institutions or any entity contracted by the state to supply goods to consumers, any business to business transaction, and every transaction occurring within the Republic. The CPA was not applicable to goods or services promoted or supplied to the state, if the consumer was a juristic person, services under employment contract, and agreements giving effect to the collective bargaining agreement.

The CPA expanded the definition of “consumer” to include users, beneficiaries or recipients of goods and services, so as to extend redress to third parties. It also included franchises who have limited protection through a voluntary industry code of conduct. The definition of “supplier” was expanded to include any public or private entity, including government institutions and all state organs that promote or supply goods and services to consumers.

The CPA allowed for the right to restrict unwanted direct marketing. A consumer had the right to refuse to accept unwanted direct marketing, to require the person to discontinue marketing to them directly, and to pre-emptively block any communication with that person. A consumer that had been approached for the purpose of direct marketing may demand, during or within a reasonable time after communication that the person responsible for initiating the communication should desist from initiating any further communication. The NCC may establish, or recognise as an authority, a registry in which any person may register a pre-emptive block, either generally or for specific purposes, against any communication that was primarily for the purpose of direct marketing. A consumer may cancel a transaction from direct marketing by notice in writing within five business days after the agreement was concluded or date when the goods were delivered. The supplier must return any payment within fifteen days after receiving notice of the cancellation. A supplier was also not allowed to market any goods or services in a manner that was likely to imply false or misleading representation concerning those goods and services. Where an advert expressly states a limitation in respect of the availability of goods and services from a supplier at a specific price, the supplier must make those goods and services available at that price, to the extent of the expressed limits.

A person directly marketing goods that concludes an agreement with the consumer had to inform the consumer of the right to rescind the agreement within the “cooling off” period. Catalogue marketing included an agreement entered into by telephone, fax or postal order where a consumer does not have the ability to inspect goods. In catalogue marketing, the supplier had to disclose the supplier name and registration, address and contact details, sales records, delivery arrangements, cancellation and return policies, and how to lodge a complaint.

In relation to the marketing of any goods and services, the supplier or its agents could not by word or conduct, directly or indirectly express or imply a false or deceptive representation concerning a material fact to the consumer, use exaggeration or ambiguity, or fail to correct an apparent misapprehension on the part of the consumer. It was a false, misleading or deceptive representation to falsely state or imply, or fail to correct an apparent misapprehension on the part of a consumer to the effect that any goods or services are of a particular standard, quality, grade, style or model.

The NCC mandate included recommending accreditation of proposed industry codes to the Minister, recommending the withdrawal of all or part of the prescribed code, recommending a scheme to be accredited as an accredited industry ombud scheme, monitoring and reviewing the effectiveness of industry codes relative to the purposes and policies of the CPA, developing and promoting the use of Codes of Good Practice, and promoting legislative reform.

Rev Zondi stated that the NCC’s ability to initiate complaints gave the impression that the entity was proactive. He noted a lot of false advertising happening in the country, specifically when it came to the medicinal and pharmaceutical sectors. Many people, especially the poor, were very gullible. He asked what the NCC was doing about this. He also wanted to know how ordinary South Africans could access the NCC.

Ms Mohlala agreed that the NCC had been bestowed wit the power to initiate complaints. However, because of these powers, the NCC had to find a systematic way of covering all sectors. They decided that they would investigate three industries per annum and assess whether there were any major problems.

In terms of access, she explained there were provincial consumer protection offices; however, these were funded through the provincial government and not national government. The NCC worked through these offices, which assisted in helping the public to have access to the NCC. The NCC also had oversight over these offices but had to report to Ministers and Members of Executive Council (MinMEC). The NCC was in the process of rolling out its business plan, which looked at recruiting volunteers in the provinces to speak to communities and assess their complaints.

Ms Mohlala said that the NCC was aware that there was a lot of false advertising in the medical and pharmaceutical industries, and these industries were being investigated. The NCC was also aware that the Information and Communication Technology (ICT) sector and retail sector was also filled with false advertising. 

Mr Kekane noted that it seemed there were more complaints about the public sector. He wished the Committee could have an idea of how many complaints were solved. The country lost millions of Rands every year due to white collar crime. It seemed that the private sector was getting away with committing white collar crime, while the public sector was always getting “called out” on charges of corruption.

Ms Mohlala replied that it was unfortunate that the majority of consumer complaints were about municipal authorities. There were also many transgressions within the ICT sector.

Ms W Newhoudt-Druchen (ANC) asked how visible the NCC was to the public. She wanted more clarity on the definition of consumer. For example, people pay for medical aid but have no choice as to whether they can say if the service they received from the doctor was good or not. Medical aid still pays out even if service was bad. What happens when a child was sick and recovers on the way to the hospital, and the doctor asks why the child was brought in but does not treat him/her and still charges the person? It meant that the person had to pay even though unhappy with the service. Also, there were many cheap shops from which people bought clothing and shoes for their children that resulted in many of these kids having blisters on their feet and similar complaints.

Ms Mohlala replied that there had been a substantial number of complaints about medical aids. This was a very complicated and technical field to deal with. The NCC had had meetings with the Council for Medical Schemes, where they were told that the industry was very complex and they would not be able to deal with it. The NCC would not stand for this, as they thought that medical aid had to simplify the language their agreements were written in so medical aid could become more user friendly to consumers. Some medical aids were being proactive and had started working with the NCC.

She said there had been claims where people said they were billed by doctors where they received bad service or when services were not rendered. She recommended that people pay the bill so that they did not get blacklisted, but that they bring the matter to the NCC immediately.

Ms Morutoa said that she did not know if this was a problem that had to do with medical aid, but people were exposed to many generic medications when they went to collect their medication instead of the prescribed original product. These generic medications were always found to be lacking when compared with the original medication. She asked the NCC to comment on this.

Ms Mohlala answered that the NCC was in the process of finding a strategy to ensure that this sort of transgression did not take place. However, they needed to get more clarity from medical aids on the matter. They wanted to know why people were given generic drugs when they were paying for the original medication.

The Chairperson asked if the NCC was utilising community media to communicate its message to the public.

Ms Mohlala answered that the NCC used community radio stations in particular to communicate with rural communities.

The Chairperson thanked the NCC for its presentation. He read out some recommendations the Committee wanted to give the NCC based on briefings they had received from the Advertising Standards Authority of South Africa (ASA), the Association of Communication and Advertising (ACA) and the Media Development and Diversity Agency (MDDA) the day before. These were:
▪ The MDDA and ACA must meet, discuss, consider and assess the issues raised by communities and report back to the Committee;
▪ The Marketing, Advertising and Communication Charter Council should improve its review mechanism and encourage media development and diversity;
▪ The Committee would engage the Department of Trade and Industry (DTI) regarding the promulgation of the Charter and the proposal from ACA that Marketing, Advertising and Communication South Africa (MAC SA) be changed to a Section 9 organisation
▪ The GCIS was to set aside a percentage of funds for community media as defined by the MDDA Act;
▪ The GCIS had to support the MDDA’s proposal to establish a community radio software management tool that would enhance professionalism, accountability, reporting and good community radio management; and
Government organs of state and State Owned Enterprises (SOEs) were encouraged to use small communities and commercial media as defined in the MDDA Act, in respect of their advertising.

The meeting was adjourned.


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