Companies & Intellectual Property Commission; National Consumer Commission: progress reports

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Trade, Industry and Competition

23 January 2012
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The Committee met with the Companies and Intellectual Property Commission as well as the National Consumer Commission for a progress report since the Committee’s last visit to the two Commissions.

The Companies and Intellectual Property Commission said it challenges included weak administrative systems, backlogs in the key area of registration, problematic Information Technology systems, an inability to respond to queries and calls from the public, a huge demand for the restoration of deregistered entities coupled with teething problems with the Annual Return system and billing as well as a lack of knowledge of the new Companies Act and its requirements.

The project undertaken to clear backlogs by August 2011 had delivered good results with backlogs cleared in many parts of the organisation. The good results yielded for backlogs in August 2011 could not be maintained, with some parts of the organisation continuing to struggle.

Reasons for the poor statistics on company registrations and amendments included numerous errors made during the initial period which required reworking, hence the pace of work had been slowed down to improve accuracy, there was a significant increase in the number of company applications since September 2011 as well as CIPC had to reply temporary resources until the new structure was in place. Additional resources had been allocated, with more to be added in January 2012.

The poor figure for transactions completed for Cooperative registration had been affected by the substantial increase in the number of applications. Additional resources had been contracted until the end of March 2012 to assist with this. Temporary resources would also be brought on board to allow the Commission to bridge this gap until the new structure was in place.

The poor performance in resolving calls was largely due to inefficiencies within the call centre and a poor ability to resolve queries. There was inconsistent and worsening performance at the call centre. The initial consideration had been to outsource the call centre. However, difficulties with IT systems and network limited the ability for full call resolution when outsourced. Outsourcing would lead to quicker answering of calls and lower call abandonment but not higher call resolution. CIPC considered call resolution as most important. As a result a decision was taken to “decentralise” the call centre by creating query handling support in business areas. This initiative would be rolled out in February 2012.

CIPC reported on service delivery improvements. It said s
ervice delivery standards had been completed which outlined the maximum amount of time a transaction should take. A complaints mechanism was in place, where service standards were not met; online company registration was rolled out on 16 January 2012 – there had been a slow initial uptake, as some faults were still found in the system; uniforms for frontline staff had been introduced to distinguish staff from “agents”; a data quality tender had been issued and was being adjudicated to improve data quality; a building tender had been issued and was in process of final adjudication; designing the strategy and structure of the new organisation was in its final stages

Members asked if there were any quality standards to which officials had to adhere; whether agents were allowed to promote themselves in CIPC offices where CIPC frontline services were offered; whether, in order to avoid outsourcing, in-house personnel could not be trained and utilised; when the permanent structure would come into being; why, despite commitments made previously, there had been an increase in the backlogs and why there was so much difficulty in securing effective IT systems.

The National Consumer Commission said that its complaints-handling staff complement was made up of five call centre agents, six professional staff, 31 contract workers and three conciliatory workers. Successes in this section included improved systems (that is, enforcement guidelines, the development of a procedure manual and work streams and categorisation of complaints as well as bulk disposal). The rate of resolution of complaints was still at 42.5% which brought the total number of resolved matters to 4 124. The number of concluded consent agreements stood at 2 301 and compliance notices issued stood at 301. Referrals (to another institution) and non-referrals (
frivolous or vexatious complaint) were at 362 while conciliations stood at 1 160.

Most of the investigations were currently before a tribunal and were expected to be dealt with completely within the near future. The emphasis placed on compliance with Section 63 of the
Consumer Protection Act (CPA), which related to pre-paid data, had yielded successes with more positive outcomes expected. For goods and services in the medical and pharmaceutical industry, an analysis had been undertaken into the rules and membership application forms and contracts of the top four open medical schemes. A report on its findings in this area would be released within the very near future. Inspections were conducted in the area of retail and manufacturing and the investigations here were soon to be completed. Major emphasis was being placed on compliance with the Consumer Protection Act in rural areas, although the reach of these inspections would largely be determined by budgetary demands. Operational challenges included an insufficient budget, insufficient capacity in relation to human capital with relevant expertise, call centre IT challenges and manual operations which hampered the efficiency of the office.

Regarding NCC legal services, 15 matters were currently before the National Consumer Tribunal. A major challenge this department faced was that it was a very expensive department to run. The success and failures of the Exemptions and Accreditation of Industry Codes (EAIC) was discussed in detail. Reporting on consumer awareness education, various rural outreach imbizos and consumer workshops were held across provinces. Media coverage in 20 publications had resulted in a national reach. Business education through presentations and meetings had also been undertaken. Challenges in this regard came in the form of province-to-province cultural and political diversity; provincial budgetary constraints for cooperative initiatives; political and/or traditional factions and a prevailing ‘what’s in it for me’ attitude proved to be barriers to entry; budgetary constraints; human resource limitations; inadequate IT equipment and systems as well as inadequate internal processes.

Financial management successes included the drafting of financial policies and procedures; the setting up of  bid evaluation, bid adjudication and audit committees; complying with the shareholder compact agreement; preparing monthly financial statements and relevant quarterly reports; getting the Commission’s budget into its own account and the effective management thereof. In addition, the accounting and human resource software had been procured. The division was adequately resourced, with most of its key positions filled.

Challenges included the late transfer of funds into the Commission’s bank account which led to it being unable to pay its service providers on time; budget constraints which impacted its business strategy negatively; the shared responsibility of the Department and the Commission for the signing of the March 2012 financials as well as the transfer of NCC assets from the Department’s assets register.

Members asked for an update on the MTN case; how many complaints had been received from low- and medium-capacity municipalities; whether there was any resolution on the ICASA matter; to what degree the Commission was equipped to work with the poorest communities; what recruitment strategy it followed in relation to securing more staff; whether it was engaging in any discussions with the Department about a long-term solution for securing enough funds annually to allow it to fulfil its mandate; which provincial Commissions were up-and-running and should these not work more closely with rural areas?


Meeting report

Companies and Intellectual Property Commission (CIPC) progress report
In her briefing, Ms Astrid Ludin, CIPC Commissioner, said that challenges the Commission had faced since its inception included weak administrative systems, backlogs in key areas of registration (company and cooperatives registration and amendments to companies and close corporations), problematic Information Technology systems, an inability to respond to queries and calls from the public, a huge demand for the restoration of deregistered entities coupled with teething problems with the Annual Return system and billing as well as an awareness of the new Act and its requirements.

The project undertaken to clear backlogs by August 2011 had delivered good results with backlogs cleared in many parts of the organisation. These results could however not be maintained, with some parts of the organisation continuing to struggle.

In relation to the amount of transactions completed between 1 May 2011 and 31 December 2011, it had completed 100% of the applications for close corporations registration and changes and 80% of applications for Company registration and 96% of applications for Company changes. It had completed 100% of the applications lodged for Name Reservation and 88% of applications lodged for Cooperative registration. Reasons for the figures related to Company registrations and amendments included numerous errors made during the initial period with required reworking, the pace of work having been slowed down so as improve accuracy, the significant increase in the number of company applications since September 2011 as well as the reliance on temporary resources until the new structure was in place. Additional resources had also been allocated, with more to be added in January 2012.

The figure for transactions completed for Cooperatives registration had been affected by the substantial increase in the number of applications. Additional resources had been contracted until the end of March 2012 to assist with this. Temporary resources would also be brought on board to allow the NCC to bridge this gap until the new structure was in place.

The statistics for the calls it received showed poor performance. This was largely due to inefficiencies within the call centre and a poor ability to resolve queries. The initial consideration was to outsource the call centre. However one soon found that, although this would lead to quicker answering of calls and lower call abandonment, difficulties with IT systems and network limited ability and would not lead to higher call resolution. The decision was therefore taken to “decentralise” the call centre by creating query handling support in business areas. This initiative would be rolled out in February 2012.

In relation to service delivery improvements, the publication of its service delivery standards had set out the maximum amount of time a transaction should take. A complaints mechanism had also been put in place for cases in which service standards were not met. These standards would also continually be revised with a view towards reducing turnaround times. Online company registration was also rolled out in January 2012, although the initial uptake here was slow as some faults were still found within the system. Frontline staff would be issued with uniforms so as to distinguish them from “agents”. A data quality tender had been issued to improve data quality and was currently being adjudicated. Similarly, a building tender had been issued and was also in the final process of adjudication. The strategy and structure for the design of the new organisation was also in the final stages.

Although there was much work which needed to be done within the organisation, things had been settling down and efforts were being made to ensure continual improvement.

Discussion
Mr J Smalle (DA) asked whether there were any quality standards to which officials had to adhere. Was there a monitoring programme in place with regards to the quality of administrative staff? Were “agents” allowed to promote themselves in NCC offices where frontline services were offered? Were the noted errors creating backlogs as a result of a lack of personnel or with a lack of skill?

Ms Ludin answered that in terms of performance management, there was not sufficient processes in place everywhere within the Commission though it was doing well in the area of intellectual property. Performance management was a major issue and was being worked on.

Ms Lungisa Matandela, CIPC Senior Manager: Customer Interface Unit, added that it did not allow agents inside its offices to interact with clients. In addition to the uniforms which would be issued to distinguish its staff from agents, the Office also released information in different forms on this matter.

A representative added that these errors were largely as a result of great pressure faced by CIPC personnel.

Ms Ludin continued that the errors were also as a result of poor performance management. There was a need to ensure people were responsible and accountable. One of the biggest issues was that of change management. The issue of agents was of major concern to the Commission. As there was a need for it to regulate the intermediaries it interacted with, it was looking at introducing a registration scheme for these intermediaries.  

Mr X Mabaso (ANC) asked whether, to avoid outsourcing, in-house personnel could not be trained and utilised.

Ms Ludin answered that the Commission could afford to outsource in a number of specific areas as there was a need to bring on board certain skills not currently within the institution.

Mr N Gcwabasa (ANC) asked whether these additional resources were material or human. When would the permanent structure come into being? Would outsourcing be done until the permanent structure came into effect or would this be done on a permanent basis?

Ms Ludin answered that these resources were mainly human. The Commission was currently in the process of finalising this structure.

Mr T Harris (DA) asked why, despite commitments made previously, there had been an increase in the number of backlogs. Why was there so much difficulty in securing effective IT systems? What was the difference between the current system and the proposed one of decentralisation? What were the updated figures for the number of vacancies? With regards to company “hijackings”, did incorrect capturing apply to the number of these cases?

Ms Ludin answered that these commitments were unfortunately not kept up after the meeting of targets in August 2011. The Commission’s aim was to achieve higher call resolution and it could not achieve this through outsourcing. The Commission had received 10 queries about company “hijackings”. However, seven of these were found not to be cases of hijacking but related rather to being wrongfully removed.

The Chairperson said that, due to time constraints, responses to any remaining unanswered questions should be submitted to the Committee in writing.

National Consumer Commission (NCC) progress report
In her presentation, Ms Mamodupi Mohlala, NCC Commissioner, said that the Commission received an average of 8 000 calls monthly, with the number of dropped calls standing at 20 000. The complaints-handling staff complement was made up of five call centre agents, six professional staff, 31 contract workers and three conciliatory workers.

Successes in this department included improved systems (that is, enforcement guidelines, the development of a procedure manual and work streams and categorisation of complaints as well as bulk disposal). In relation to the resolution of complaints, the resolution rate was “still” at 42.5% which brought the total number of resolved matters to 4 124. The number of concluded consent agreements stood at 2 301 and compliance notices issued stood at 301. Referrals (to another institution) and non-referrals (
frivolous or vexatious complaints) were at 362 while conciliations stood at 1 160.

With regards to its investigations, most of the matters were currently before a tribunal and were expected to be dealt with completely within the near future. Emphasis would be placed on compliance with Section 63 of the
Consumer Protection Act (CPA), related to pre-paid data. There had been some successes here with certain companies immediately amending their contracts so as to be compliant with this section. Positive outcomes were also expected with regards to the remaining entities as there had been little resistance. 

For goods and services in the medical and pharmaceutical industry, an analysis had been undertaken into the rules and membership application forms and contracts of the top four open medical schemes. A report on its findings in this area would be released within the very near future. Inspections were conducted in the area of retail and manufacturing and the investigations here were soon to be completed. Major emphasis was being placed on compliance with the CPA in rural areas, although the reach of these inspections would largely be determined by budgetary demands. Operational challenges included an insufficient budget, insufficient capacity in relation to human capital with relevant expertise, call centre IT challenges and manual operations which hampered the efficiency of the office.

Regarding NCC legal services, 15 matters were currently before National Consumer Tribunals. These were important matters which would have a significant impact on consumers throughout the telecommunications sector. Internal resources had been maximised so as to avoid the use of external service providers and had, in turn, saved the Commission significant amounts of money. An agreement had been entered into with various attorneys and advocates for reduced legal costs. This was done without compromising the quality of service being provided. In addition, eight legal graduates had been recruited to the legal department and were currently undergoing training. A major challenge this department faced was that it was a very expensive department to run.

For consumer awareness education, various rural outreach imbizos and consumer workshops were held across provinces. Media coverage in 20 publications had resulted in a national reach. Business education had been undertaken via presentations and meetings. Challenges in this regard came, externally, in the form of province-to-province cultural and political diversity, provincial budgetary constraints for cooperative initiatives as well as political and/or traditional factions and a prevailing ‘what’s in it for me’ attitude proving to be barriers to entry. Internally, challenges here included budgetary constraints, human resource limitations, inadequate IT equipment and systems as well as inadequate internal processes.

Financial management success included the drafting of financial policies and procedures, the setting up of bid evaluation, bid adjudication and audit committees, complying with the shareholder compact agreement, preparing monthly financial statements and relevant quarterly reports as well as getting the Commission’s budget into its own account and the effective management thereof. In addition, accounting and human resource software had been procured. The division was adequately resourced with most of its key positions filled.

Challenges around financial management included the late transfer of funds into the Commission’s bank account which led to it being unable to pay its service providers on time, budget constraints which impacted its business strategy negatively, the shared responsibility of the Department and the Commission for the signing of the March 2012 financials as well as the transfer of its assets from the Department assets register.

Information and Communications Technology (ICT) successes included ICT policies having been drafted, an ICT director having been appointed, the establishment of a server room, the even distribution of computers, the implementation of call centre management and the deployment of Microsoft software. The Commission’s own web domain name had been registered and a Case Management System was ready for implementation.

Challenges in this area included the realignment of the strategic approach, the integration of the different areas into the strategy, a lack of support IT staff, no ownership of the website and the continuing struggle to install a Telkom or Neotel line as a result of copper theft.

Human resources success included the development of human resource policies, the filling of all positions at the level of Chief Director and the employment of 45 unemployed graduates on contract basis. Of the staff complement, 54% was female, 46% male and 4% were disabled.

Challenges here included budgetary constraints leading to only 24% of the approved positions being filled, 40% of staff at executive level being female, the high volume of work which had to be dealt with by only a few employees and the high staff turnover rate. In addition, there was poor communication between the Department of Trade and Industry and the Commission on staff issues, a lack of a performance management system, a lack of relevant skills in the market (particularly with regards to senior investigators, researchers and statisticians).

Discussion  
Mr A Alberts (FF+) asked for an update on the MTN case. How much did the Commission need in funds in order to function effectively? Could the Commission not look into recruiting members of the South African Police Service (who were leaving the service) as possible investigators?

Ms Mohlala answered that, here, there were disagreeing views about whether the compliance notice should have been issued to MTN Pty (Ltd) or MTN SP. Though SAPS members could be used in certain areas, there were other areas in which specific Information Technology knowledge was a prerequisite.

Mr Harris asked how many more personnel it needed to function effectively and how much this would cost. How many complaints had been received from low- and medium-capacity municipalities? Was it satisfied with the current office space it occupied? Was there any resolution on the issue with ICASA?

Ms Mohlala answered that a task team had been set up to deal with this and the Department had prepared a report on these municipalities for the Minister. Complaints were, however, mainly from larger municipalities. The current office space was satisfactory. The Commission was working with ICASA and had also accepted the need for joint responsibility as there were complaints stemming from the industry.

Mr Mabaso asked to what degree the Commission was equipped to work with the poorest communities. Was there any system in place to manage this? Does the Commission equip communities to resolve issues themselves? Was it satisfied with the effectiveness of its reach into rural areas?

Ms Mohlala answered that every effort was made to reach the poorest communities although there were limitations as a result of budgetary constraints. The Commission worked closely together with various non-government organisations with a view towards equipping them with information. This assisted them better in dealing with consumer complaints on the ground.

Mr Gcwabasa asked what recruitment strategy was being followed to secure more personnel. Was there any programme in place to recruit and train staff internally? Had it considered working together with institutions of higher learning for the recruitment of more staff?

Ms Mohlala answered that it had adopted a strategy of recruiting people and training them. This strategy had allowed it to work more effectively. Discussions were being held with the University of Witwatersrand’s law faculty to recruit legal graduates who were trained in consumer protection.

Mr G Selau (ANC) asked what was done about ascertaining the legality of foreign-owned businesses. Why had it not looked into Parliament’s medical aid scheme? What mode of transport was referred to with regard to the North-West province?

Ms Mohlala answered that the Commission looked at the issues of fair pricing and health and hygiene standards. The only investigations completed to date were of open medical schemes, though it would look into ParlMed once it looked into closed schemes. The mode of transport referred to here was road transport, that is, busses. 

Mr Smalle asked whether NCC was engaging in discussion with the Department of Trade and Industry on a long-term solution for securing enough funds annually to allow the NCC to fulfil its mandate. Was there a greater interest in advertising in print media? Were the number of complaints inform its emphasis on present investigations?

Ms Mohlala answered that the NCC budget was a critical issue as suspending the call centre would result in a growing number of consumer complaints not being handled. Operational requirements were on the other hand a significant factor. This put it in a difficult position as it faced the possibility of having to suspend this service. It was looking into securing greater exposure, particularly through rural and community newspapers. Investigations were triggered by the trends within the complaints lodged.

The Chairperson asked which provincial commissions were up-and-running. Should these not work more closely with rural areas?

Ms Mohlala answered that the Commission took it upon itself to do rural outreach in provinces where there were no programmes of activities,

The Chairperson said that, due to time constraints, responses to unanswered questions should be forwarded to the Committee in writing.

The meeting was adjourned.




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