The National Consumer Commission had received complaints covering a wide spectrum of the South African business community, and was currently in the process of investigating a large number of issues affecting the daily lives of all local consumers.
Since its establishment in April, its call centre had received an average of 8 000 calls a month, 616 e-mails, faxes or letters a week (9 939 written complaints and requests for advice had been received to date), and 101 “walk-ins” per month. An analysis showed most of the complaints (2 189) were levelled at the retail sector, followed by the motor industry (1 221), mobile and telecom (1 120), property, timeshare and financial (1 100), government and municipalities (450), travel and tourism (185), fitness centres (237) and education and medical services (110).
Where a supplier was found to be not in compliance with the Consumer Protection Act, following the issuing of compliance notices, the matter would be referred to the Tribunal, where fines of R1 million or 10% of annual turnover could be imposed.
The Commission had initiated proactive investigations into three sectors – Information and Communications Technology (ICT), Retail and Manufacturing, and Medical and Pharmaceuticals – and this practice of identifying three sectors for investigation would continue each year. Current investigations were centred on fraudulent property schemes, where consumers alleged they did not have access to homes they had bought; fraudulent motor industry schemes, where second-hand cars were purportedly sold as new; and practices in the timeshare industry.
Other areas of investigation were:
* The cellphone sector, where complaints about exorbitant international roaming charges, SMS peak and off-peak costs, network call costs, and “per second” versus “per minute” charges, were being looked at.
* The “bundling” of broadcasting channels by Multichoice. Section 13 of the Consumer Protection Act (CPA) required bundled services to be able to be sold individually, or if bundled, to provide an economic benefit to the consumer.
* The contracts of the top four open medical aid schemes, as several rules and contract provisions had been found to be in conflict with the CPA, and the service levels in public hospitals in areas where consumers were particularly vulnerable.
* The labelling of pharmaceutical products, as well as the industry’s advertising and marketing, and issues relating to homeopathic versus generic medication.
* The high level of non-compliance with the CPA in the retail sector, particularly in respect of returns and refunds, and the labelling and pricing of products.
Areas where research and assessments would be undertaken included:
* The banking sector, building on the work already done by the Competition Commission. The focus would be on debit orders, and the penalties for dishonoured debit orders, and automatic teller machine (ATM) charges, because low-income customers were usually the hardest hit.
* The airline industry, with specific regard to ticket pricing and excess baggage charges. The differentiation in service levels between first class, business class and economy class would be examined to assess whether the passenger received full value for the differentiation in pricing.
* The Consumer Affordability Index. While this was closely related to the Consumer Price Index, the National Consumer Commission wanted to assess the impact of certain cost increases imposed from time to time, such as road tolls, property rates and bank charges, on affordability to consumers.
* Complaints about foodstuffs sold after the sell-by date, and the health implications.
* The motor industry, where the National Consumer Commission had noted many complaints about the quality of so-called up-market vehicles. Comparisons were necessary to ensure that the quality of locally made vehicles matched the quality of those made in overseas, to ensure consumers in developing countries did not end up with inferior products.
Members were told that litigation costs were likely to be considerable, as there appeared to be resistance to having to comply voluntarily, and many cases would therefore end up in court. There was already evidence that the “big players” would use their financial muscle to frustrate the efforts of the Commission.
A specific interest group had made a detailed submission to the Commission on the matter involving a supermarket injecting and repackaging chickens, with a view to instituting a class action suit, as they felt this practice contributed to obesity and health problems, including cancer. The Commission had requested medical evidence to substantiate this claim. As far as the CPA was concerned, it was incumbent upon the retailers concerned to make customers aware of what they were doing with the chickens.
The National Consumer Commission’s organisation structure, budget, communications strategy and relationships with government and community structures were fully discussed, drawing generally favourable comment from all members of the Committee.
The Chairperson welcomed the National Consumer Commission, and said that although the Commission was still a “four-month old baby,” the presence of the media indicated the extent of interest in the Commission’s activities.
The Deputy Director-General: Corporate and Consumer Regulation of the Department of Trade and Industry, Ms Zodwa Ntuli, said that the agency had achieved much in a very short period, and was fully supported by the Department.
Mr Ebrahim Mohamed, Deputy Commissioner of the National Consumer Commission (NCC), described the activities of the Complaints Handling Division of the NCC since April. During this period, the call centre had received an average of 8 000 calls a month, 616 e-mails, faxes or letters a week (9 939 written complaints and requests for advice had been received to date), and 101 “walk-ins” per month. An analysis showed most of the complaints (2 189) were levelled at the retail sector, followed by the motor industry (1 221), mobile and telecom (1 120), property, timeshare and financial (1 100), government and municipalities (450), travel and tourism (185), fitness centres (237) and education and medical services (110).
The NCC had achieved a number of successes in dealing with complaints. These included the saving of about R15 million for consumers wrongly billed by municipalities – including one in excess of R7 million from the City of
Mr Mohamed said settlements and consent orders required the supplier of goods or services to, firstly, stop the conduct which had given rise to the complaint, and then to compensate the consumer by means of a refund or replacement. So far, this had resulted in 66 consent orders in the retail sector, 31 in the motor industry, 70 in the mobile cell phone sector, 30 with municipalities, and 44 in other sectors. The NCC’s conciliation process had brought suppliers and consumers together in 81 instances in an effort to settle disputes amicably.
Where a supplier was found to be not in compliance with the Consumer Protection Act (CPA), following the issuing of compliance notices, the matter would be referred to the Tribunal, where fines of R1 million or 10% of annual turnover could be imposed.
The Complaints Handling Division was currently using manual systems, and urgently needed an electronic case management system to speed up the process. Other challenges included lack of suitable accommodation and sufficient skilled staff, as well as a need to develop an integrated complaints handling system with the provinces.
Ms Prudence Moilwa, Division Head, Enforcements & Investigations, said the Commission had initiated proactive investigations into three sectors – Information and Communications Technology (ICT), Retail and Manufacturing, and Medical and Pharmaceuticals – and this practice of identifying three sectors for investigation would continue each year. Current investigations were centred on fraudulent property schemes, where consumers alleged they did not have access to homes they had bought; fraudulent motor industry schemes, where second-hand cars were purportedly sold as new; and practices in the timeshare industry.
Ms Moilwa provided details of NCC’s proactive investigation into the ICT sector, during which they looked at the terms and agreements in the contracts entered into by subscribers to cellphone providers, Multichoice and Top TV, the SABC, and Telkom and Neotel, to ensure they complied with the CPA. This had resulted in their being issued with letters requesting that they align their contracts with the Act, as an NCC analysis had indicated they were not in compliance. So far, only Neotel had entered into a consent agreement, while the others had all raised issues, so compliance notices had been issued to MTN, Vodacom, Cell C, Telkom and 8.ta. The investigations into Multichoice and Top TV were continuing.
Complaints about exorbitant international roaming charges, SMS peak and off-peak costs, network call costs, and “per second” versus “per minute” charges, were also being investigated.
The Commission had concerns about the terms and conditions included in SABC television licences, and it was in the process of entering into a consent agreement whereby these terms and conditions would be properly disclosed for consumers.
The NCC held the view there was a possible contravention of Section 13 of the CPA in regard to the “bundling” of broadcasting channels. Section 13 required bundled services to be able to be sold individually, or if bundled, to provide an economic benefit to the consumer.
In the Medical and Pharmaceutical Sector, the top four open medical aid schemes had been asked to ensure their contracts were aligned to the CPA. Several rules and contract provisions had been found to be in conflict with the CPA, and consultations were continuing with the Council for Medical Aid Schemes. The terms and conditions of closed schemes would be analysed next, while the charging of medical aid levies and shortfalls in hospital benefits would also be investigated.
The service levels in public hospitals were coming under scrutiny in areas where consumers were particularly vulnerable, such as frail care clinics, neo-natal units, abortion clinics, facilities for people with disabilities in rural hospitals, and hospices. Private hospitals’ tariffs were under investigation, as well as their approval process, following complaints of medical aids refusing to pay after the patient had obtained authorisation. The NCC was also looking at situations were hospital admissions were extended unnecessarily, and checking on ambulance response times to ensure optimum service levels. Reports on all these issues would be published soon.
The Commission believed the labelling of pharmaceutical products needed investigation. The industry had formed a steering committee to ensure its practices were aligned to the CPA, and had made submissions to the NCC about product labelling, advertising and marketing, and issues relating to homeopathic versus generic medication.
In the Retail and Manufacturing Sector, investigations had been carried out at various retail facilities in the Pretoria area, prior to going nationwide, and a high level of non-compliance with the CPA had been found, particularly in respect of returns and refunds, and the labelling and pricing of products. The offending retailers had been sent letters requiring them to take remedial action or face a compliance notice – and ultimately the possibility of a fine imposed by the Tribunal. Retailers who erected signs indicating “no returns” or “no refunds” were in direct contravention of the CPA, and the NCC was looking at creating an industry code of conduct for compliance on returns and refunds. She added later that the Commission needed to resolve the issue of quantification – how much of a refund was appropriate in a specific instance.
The Commission had found instances where stores withheld all lay-by funds when a customer cancelled a lay-by, although they were legally required to retain only 1% of the purchase price. Where contraventions had been found, those responsible would have to refund the affected customers.
Inspectors were being sent to two selected rural towns in each province to check on compliance by retailers with the CPA, where on-the-spot compliance notices would be issued. Villagers were reporting that shops were selling food such as mealie meal past its expiry date, some with insect infestation. They also complained about shop owners and their employees living and sleeping in the stores – often on top of mealie meal bags – and this created a health hazard. The Commission would be working with the police and National Prosecuting Authority to ensure compliance with the Act where serious contraventions were uncovered.
Ms Moilwa said additional investigative staff, properly trained, were required, and expressed concern for the safety of inspectors, as “some suppliers do not like us very much!”
Ms Phumeza Mlungu, Stakeholder Manager for the NCC, outlined the steps taken to inform communities about the activities of the Commission, particularly in the rural areas. These had taken the form of izimbizos, meetings with traditional leaders (who had been identified as very important stakeholders), provincial seminars, and meetings with non-governmental organisations (NGOs) with a view to accrediting consumer protection groups. Workshops had also been held involving youth and women’s groups, and campaigns held in shopping malls, community halls and taxi ranks.
The NCC had participated in an SADC Competition and Consumer Policy Workshop in
She paid tribute to the TV, radio and print media for publicising the work of the Commission.
To achieve representation in the provinces, the NCC was establishing standing advisory committees whose main roles were to provide advocacy, coherence in the implementation of the CPA, and co-operative governance and concurrent jurisdiction to ensure the Act was equitably applied throughout the country.
NCC community workers drawn from the ranks of unemployed graduates, would be stationed in the offices of traditional leaders to provide continuous interaction with rural consumers.
Apart from staffing and budget challenges, the NCC had encountered problems in securing the co-operation of the provinces, mainly because they had no budgets of their own to provide the required support. Funding the NCC’s information booklet was also a problem, because the cost of translating it into the various languages needed to reach the targeted rural areas, had been quoted at R500 000 for 9 000 copies.
Ms Mamodupi Mohlala, NCC Commissioner, advised the Committee on the sectors where research and assessments would be conducted.
The first of these were banking charges, building on the work already done by the Competition Commission. The focus would be on debit orders, and the penalties for dishonoured debit orders, and automatic teller machine (ATM) charges, because low-income customers were usually the hardest hit.
The NCC would also look at the airline industry, with specific regard to ticket pricing and excess baggage charges. The differentiation in service levels between first class, business class and economy class would be examined to assess whether the passenger received full value for the differentiation in pricing. So-called low-cost airlines had created the impression that they offered the lowest fares, but a preliminary investigation had shown that while they might have a low overhead and cost structure, this did not necessarily translate into cheaper fares, and consumers needed to be made aware of this.
Research would be conducted into the Consumer Affordability Index. While this was closely related to the Consumer Price Index, the NCC wanted to assess the impact of certain cost increases imposed from time to time, such as road tolls, property rates and bank charges, on affordability to consumers.
In the manufacturing and retail sector, the NCC was investigating complaints about foodstuffs sold after the sell-by date, and the health implications. The Department of Health had advised that there were no regulations to compel retailers to remove food from their shelves after reaching the expiry date, as it was merely a recommended date, but if it could be shown that this practice posed a health threat, appropriate regulations could be introduced. In rural areas, the sale of rotten meat and infested mealie meal posed a major health threat, and steps needed to be taken to ensure established retailers did not on-sell stale or outdated goods to rural stores.
In the motor industry, the NCC had noted many complaints about the quality of so-called up-market vehicles. Compliance orders had been issued to major motor dealers, and this was an issue which would be publicised during the week. Comparisons were necessary to ensure that the quality of locally made vehicles matched the quality of those made overseas, to ensure consumers in developing countries did not end up with inferior products.
A Legal Services Division had been set up in the Commission which would represent the NCC at the Tribunal, as the cost of employing in-house attorneys would be far less than using outside legal services. The Division would issue compliance notices and consent orders, make input on applications for accreditation of codes and Ombud schemes, provide advisory opinions, and prepare codes of good practice.
Mr Kgabo Mantsho, Chief Financial Officer, said the NCC had so far filled 43 of the 131 permanent posts approved, while 50 contract workers had been employed to assist the Commission perform its tasks. The inability to fill all the posts was due to budget constraints and a lack of space at the DTI offices, but the approval of the budget and the move to new premises would alleviate these problems. Special skills in the fields of economics, statistics, civil engineering, finance, law, property, banking and medicine were required to fulfil its mandate.
Mr Ntsieleni Netshitomboni (Information Technology Manager) said that the Information and Communications Technology (ICT) section would be starting from scratch at the NCC’s new premises, and he listed the requirements in priority order, at a total cost of almost R13 million. He said the major item – a case management system costing R4,2 million – was essential to replace the slow manual system. He added that the creation of a web site would enable consumers to log complaints and monitor progress in the way they were being handled.
Mr Mantsho concluded the presentation by comparing the NCC’s current budget allocation of R33 million, to the “ideal” budget of R98 million needed to cover its running and capital costs.
Mr K Sinclair (COPE,
Ms Mohlala said the fact that the bank client was a customer receiving a service from the bank, and the provision of a recording would be part of that service, so the customer should be entitled to it, although there might be cost implications.
Mr Sinclair expressed criticism on the involvement of traditional leaders in the rural areas, to the exclusion of local government, which had a much stronger constitutional obligation to play a role in consumer protection.
Ms Mohlala said the Commission did in fact engage with all the structures within a particular community, including local government councillors, but had found that in the rural areas, it was necessary also to involve traditional leaders in order to reach its target audience.
Mr Sinclair said he had been amazed to hear on the radio the previous evening that the quality of South African-made cars was the highest in the world. This was a feather in the cap for the local industry. The number of faulty cars recalled was far higher overseas than here.
Ms Mohlala said a substantial number of complaints about vehicle quality had been received, and these needed to be categorised. Further information on car quality standards was required.
Mr Sinclair said he had heard that it took about six weeks for the Commission to deal with a complaint. This protracted period could result in a complainant being blacklisted or losing property or belongings while it was being handled.
Ms Mohlala replied all complaints were assessed within 48 hours of receipt, and those which were considered urgent were given priority and dealt with immediately. Non-urgent matters were handled within six weeks.
Ms B Abrahams (DA,
Mr M Maine (ANC,
Ms Mohlala said the presentation had stressed the efforts being made to engage with rural communities, because they were the most difficult to reach. However, it was obvious from the initial complaints that the urban and peri-urban communities were better informed, although it was concerning that it was mostly the upper and middle classes who were involved. This indicated more efforts were required at grass roots levels in these communities.
Ms Abrahams urged the NCC to use local community radio stations to communicate with rural communities, as there was a low readership of newspapers in these areas.
Ms Mohlala agreed that this was necessary, as up to now the NCC had tended to respond to queries from media. It would now adopt a proactive response at community radio stations with specific programmes of engagement on a continuing basis.
Ms Abrahams asked how many of the 9 939 complaints received to date had actually been resolved.
Ms Mohlala said that this figure included requests for advice, leaving a balance of around 6 000 actual complaints. She did not have exact figures, but estimated that over 1 000 had been resolved by now.
Ms Abrahams asked how the Commission handled complaints involving a house being sold to more than one person.
Ms Mohlala acknowledged that the NCC had received such complaints, including instances where an occupant was still in a house, denying the purchaser access to his property. While it was grappling with these issues, it was important for the police to play a role, and financial institutions should also be compelled to ensure a property was available before making bond finance available.
Ms Abrahams asked how people could know how to comply with SABC licence requirements.
Ms Mohlala said the fact that people were unaware how much a TV licence cost, or when it was due, or how much they owed, had prompted the Commission to say that the SABC needed to have terms and conditions of licence. Under the Broadcasting Act, there should also be rebates for certain categories of viewers, while people receiving social grants, pensioners and military veterans should be exempt from licence fees. This should be written into the SABC’s terms and conditions.
Ms Abrahams asked what criteria were required for people in rural areas to set up consumer advocacy offices.
Ms Mohlala said the NCC was still drafting these criteria, and in the meantime was checking on the readiness of NGOs to act as consumer protection groups.
Ms E van Lingen (DA,
Ms Ntuli, DTI, said temporary exemption had been granted to certain low-capacity municipalities, but not to the major metros. She added that State bodies were bound by the provisions of the CPA.
Ms Van Lingen said there seemed to be a significant gap between the salary scales for upper and lower-echelon employees.
Ms Mohlala said that permanent staff were all on government-approved salary scales, but the gap was accentuated by the employment of a large number of lower-level contracted workers.
Ms Van Lingen suggested that another sector – people selling funeral policies – should be investigated, because they were not re-insurers, and were taking money that should be paid over to re-insurance companies, resulting in people being “ripped off” very badly.
Ms Moilwa said the Enforcement Division had picked up problems, mainly related to delays in payments in rural areas, as well as incidents involving lack of understanding of terms and conditions. These were being dealt with by the Commission.
Ms Van Lingen expressed appreciation that the issue of TV programmes had been raised, as she was interested only in sport, news, the Parliamentary channel and maybe one movie channel, and for this she had to pay for a full bouquet.
Ms Mohlala said the Commission was heartened by the support the Committee had shown for its approach on the matter, and would like the opportunity to make a more detailed presentation to the Committee. In the meantime, the NCC was engaging with both Multichoice and Top TV.
Ms Van Lingen said where the price at the till did not match the price on the shelf, the consumer often did not notice the discrepancy until later, and then it was not worth the trouble to return for a relatively small refund.
Ms Mohlala said that in most cases, retailers made an immediate refund when a complaint was lodged with the NCC. She urged consumers to lodge complaints even when the amount involved was small, as they mounted up to a sizeable amount if left unchecked.
Referring to people sleeping on the premises, Ms Van Lingen said spaza shops were a big problem, particularly in the case of foreigners in the townships. With municipalities not rezoning these properties, a health problem was being created, so she welcomed the NCC’s intention to investigate this problem.
Ms Ntuli said that while local municipalities were responsible, the Business Act did not give municipalities sufficient power to deal with these problems, and was therefore being reviewed. The review would be presented to Parliament in the first quarter of 2012.
The Chairperson asked if he was correct in concluding that people complained less about Government, as opposed to the private sector.
Ms Mohlala said while the presentation figures supported this view, it should be borne in mind that the figures could fluctuate from time to time.
The Chairperson wanted to know how soon the Commission would be moving to its new premises.
Ms Ntuli said the new premises had been identified, and NCC staff would be moving in on October 1.
The Chairperson suggested that the NCC should be guided by the complaints it received in determining the three areas it chose each year for investigation.
Ms Mohlala agreed, but explained that the medical sector had been selected because of its impact on the aged, a vulnerable group, especially in regard to the cost of chronic medication.
The Chairperson advised the NCC to work with the provinces and local government to use their facilities for engagement with communities, in order to reduce costs.
Ms Mohlala said this was already happening, although there was a different level of co-operation from province to province.
The Chairperson said there was a need for bank charges to be investigated. He had heard that when a particular bank was not meeting its targets, it could -- with a “mere press of a button” -- impose a R5,50 service charge on all its two million customers, and then do the same the following week. He also welcomed the investigation into ATM charges.
Ms Mohlala said some categories of workers, such as domestic workers, were finding up to 20% of their earnings being eroded by bank charges. Many bank clients were unaware that each time a card was used, it incurred a charge.
The Chairperson asked whether the matter involving a supermarket injecting and repackaging chickens had been referred to the Commission, and if it could name and shame the perpetrators.
Ms Mohlala said a specific interest group had made a detailed submission to the Commission with a view to instituting a class action suit, as they felt this practice contributed to obesity and health problems, including cancer. The Commission had requested medical evidence to substantiate this claim. As far as the CPA was concerned, it was incumbent upon those retailers to make customers aware of what they were doing with the chickens.
Ms Ntuli said the mandate of the NCC was very big, accentuated by the fact that the capacity of the provinces to handle consumer issues was totally inadequate. The original intention had been for the Commission to handle national issues, and for the provinces to deal with local issues, but the situation now needed to be reassessed. It might be necessary for a larger staff structure to be considered.
She also warned that litigation costs were likely to be considerable, as there appeared to be resistance to having to comply voluntarily, and many cases would therefore end up in court. There was already evidence that the “big players” would use their financial muscle to frustrate the efforts of the Commission.
The Chairperson complimented the NCC delegation on its presentation, reiterating the sentiment expressed by several Members, and closed the meeting.
- We don't have attendance info for this committee meeting
Download as PDF
You can download this page as a PDF using your browser's print functionality. Click on the "Print" button below and select the "PDF" option under destinations/printers.
See detailed instructions for your browser here.