National Consumer Commission on its Annual Performance Plan

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Meeting Summary

The National Consumer Commission briefed the Committee on its Strategic Plan and its Annual Performance Plan.

Prior to the enactment of the Consumer Protection Act (CPA), SA lagged behind other international jurisdictions in protecting its consumers. Consumer protection was a concurrent functional area of national and provincial legislative competence. The CPA was the principal national legislation. There was a genuine need to intensify awareness campaigns on the rights of consumers. The three major strategic outcome oriented goals for the NCC was to promote consumer protection and safety, to promote reform of consumer policy and consumer protection legislation and lastly to conduct research and promote public awareness on consumer protection matters. 

A breakdown was given of the targets for each programme:

Programme 1: Administration

To improve governance, compliance and resource requirements of the NCC the annual target was to have its Information Communication Technology (ICT) Strategy 100% fully implemented.

Programme 2: Consumer Safety and Protection

On investigations conducted and reports produced the annual target was to have 12 high impact investigations and 22 other inspections conducted. Reports with recommendations on both types of investigations would be produced and would be approved by the Commissioner. 

Programme 3: To promote reform of consumer policy and consumer protection legislation

On administering and monitoring product recalls the annual target was to produce a report in line with published product recall guidelines or as agreed upon with the supplier.

Programme 4: To conduct research and to promote public awareness on consumer protection matters

The annual target was to identify two acts that affected the welfare of consumers which were inconsistent with the purposes of the CPA and to develop proposals for the reform of practices. The proposals in the form of a report would be approved by the Commissioner and be submitted to the Minister of Trade and Industry

The Committee was provided with insight into the financial plan of the NCC. The NCC was allocated R54.3m for 2017/18. Around 78% of the allocation went towards employee related costs. The remaining 22% was for operations. It was felt that the NCC was under funded as consumer protection was a huge space. The NCC’s requests for additional funding were unsuccessful.

The Committee was in agreement that the mandate of the NCC was huge compared to the small budget that it was allocated. Perhaps the matter needed to be raised with the DTI. The NCC essentially had an unfunded mandate. Members were interested in the efforts of the NCC in provinces. The efforts of the NCC were appreciated given its limited budget. Members strongly felt that the everyday consumer’s rights had to be protected. Everyone did not have the financial means to run to courts for relief. The NCC was asked to take steps on online transactions. Other members however felt that funds spent on research on online transactions could be better used on advocacy efforts. Members felt that the NCC needed to intensify its advocacy work but was still aware of the budgetary constraints that the NCC faced. It was evident that advocacy was especially lacking in rural areas. The NCC was asked why in rural areas there were no investigations into matters that affected rural people. How would rural persons benefit per se from NCC’s efforts on online transactions? Rural persons were indigent and did not even have computers let alone internet. There were bigger issues which affected the poor and the vulnerable. A major one was illegal deductions from their social grants. These types of issues should be a priority for the NCC. The NCC was asked why its planned staff structure sat at 182 but the actual figure was only 85. Why the huge discrepancy? The NCC was urged to inform its board that the staff structure as it stood was not feasible. The NCC was effectively sitting with a business plan that could not be implemented. Members also pointed out that the staff bill of the NCC almost used up its entire budget. Members wished Committee Staff to record proceedings so that when members next met with the DTI it could raise issues with it. Members noted that perhaps there was a need to rationalise the number of entities that were under the DTI. Members observed that it seemed as if the targets of the NCC were few compared to the huge amounts of complaints that it received. Why were there only twelve investigations when there were huge amounts of complaints? Members pointed out that they too regularly received complaints from the public. The NCC was asked whether the CPA was still effective since it came into effect. Were amendments to the CPA needed? Members further asked who funded the Ombud Schemes. How did the NCC interact with Ombud Schemes? Members asked whether the NCC monitored Ombud Schemes. The NCC was asked whether it had a toll free number on which members of the public could contact it. Members furthermore asked what the NCC’s relationship with the Presidency’s Hotline was. Why did certain provinces have consumer courts whilst others did not? Was it due to a lack of finances? The NCC was asked what was being done about foreigners who were street vendors and sold drugs. What work was the NCC doing on the sugar tax and on the possibility of it becoming law? Members asked whether the NCC was looking at protecting consumers when it came to illicit goods such as cigarettes. Members appreciated the efforts of the NCC on its Opt-Out Register as telemarketers constantly pestered people on their cell phones. Members were well aware of the fact that huge companies had the finances to tie up the NCC in courts for many years when actions were taken against them. Members felt it therefore best to deal with matters through adjudication and negotiation. The Committee reiterated its appreciation for the work that the NCC was doing but nevertheless felt that the NCC could do more.  

Meeting report

Briefing by the National Consumer Commission (NCC) on its Strategic Plan and its Annual Performance Plan 2017/18

The delegation comprised of Mr Ebrahim Mohamed Commissioner, Ms Thezi Mabuza, Deputy Commissioner and Ms Ntsobe Nkoana, Chief Financial Officer (CFO). The Department of Trade and Industry (DTI) was represented by Ms Ntombi Matomela, Chief Director: Operations and Projects.

Strategic Plan 2017/18 – 2021/22

Mr Mohamed undertook the briefing. The Committee was provided with insight into the performance delivery environment in which the NCC functioned. Prior to the enactment of the Consumer Protection Act (CPA), SA lagged behind other international jurisdictions in protecting its consumers. Consumer protection was a concurrent functional area of national and provincial legislative competence. The CPA was the principal national legislation. The more rural provinces had the least services for consumer protection. The CPA called for a focus on rural and vulnerable areas. The NCC sought to encourage consumers and suppliers to attempt to resolve their disputes amongst themselves prior to referring the complaints to alternate dispute resolution agents and then finally to the NCC. The courts had recently confirmed that consumers should first exhaust all the Alternative Dispute Resolution (ADR) processes as contained in the CPA before approaching courts. Insofar as investigations were concerned, despite increasing demand the NCC was unable to investigate every consumer complaint due to its limited resources. It was however evident that the vast majority of consumers did not lodge complaints. There was a genuine need to intensify awareness campaigns on the rights of consumers. The three major strategic outcome oriented goals for the NCC was to promote consumer protection and safety, to promote reform of consumer policy and consumer protection legislation and lastly to conduct research and promote public awareness on consumer protection matters. 

Annual Performance Plan 2017/18

Programme 1: Administration

To improve governance, compliance and resource requirements of the NCC the annual target was to have its Information Communication Technology (ICT) Strategy 100% fully implemented. In 2016/17 there had been only 80% implementation.

Programme 2: Consumer Safety and Protection

On investigations conducted and reports produced the annual target was to have 12 high impact investigations and 22 other inspections conducted. Reports with recommendations on both types of investigations would be produced and would be approved by the Commissioner. 

Programme 3: To promote reform of consumer policy and consumer protection legislation

On administering and monitoring product recalls the annual target was to produce a report in line with published product recall guidelines or as agreed upon with the supplier. Another target was to complete procurement of the Opt-Out Registry and to enter into a management agreement, thereafter to commence with the establishment of the Registry.

Programme 4: To conduct research and to promote public awareness on consumer protection matters

The annual target was to identify two acts that affected the welfare of consumers which were inconsistent with the purposes of the CPA and to develop proposals for the reform of practices. The proposals in the form of a report would be approved by the Commissioner and be submitted to the Minister of Trade and Industry. Another target was to have 100% of registered consumer complaints analysed, trends established and to have annual and quarterly reports produced and approved by the Commissioner.

Ms Nkoana spoke to the financial plan of the NCC. The NCC was funded by allocations decided upon by parliament and provided by National Treasury through the DTI. The NCC did not generate its own revenue. When the NCC imposed a penalty such funds were paid into the National Revenue Fund. The NCC was allocated R54.3m for 2017/18. Around 78% of the allocation went towards employee related costs. The remaining 22% was for operations. The NCC tried its best to work smart and to leverage from other institutions. The DTI also came on board to assist the NCC with accommodation and related costs. It was felt that the NCC was under funded as consumer protection was a huge space. The NCC’s requests for additional funding were unsuccessful. Hence the NCC tried to achieve more with less.

Discussion

The Chairperson said that the Committee was interested in what the NCC did in the provinces. He stated that that the Chairperson of the Select Committee on Land and Mineral Resources, Mr O Sefako (ANC, North West) had been hospitalised the night before. Mr B Nthebe (ANC, North West) wished to visit him in hospital and would therefore have to leave the meeting early. As such he would be afforded the opportunity to pose his questions to the NCC first.

Mr Nthebe said that Members appreciated the efforts of the NCC even though it had to operate under tight fiscal constraints. He urged the NCC close the loop on online transactions. People no longer only used the traditional methods of purchase. Online shopping was popular. He understood the NCC to have a huge challenge. Justice today seemed to be only for those who had money. It had to be ensured that consumers also had justice and protection. It was therefore important that the NCC needed to intensify its advocacy work. Advocacy especially needed to take place in rural areas. People in rural areas had problems but there was nobody to assist them. He asked why the planned staff complement of the NCC was 182 but the actual staff complement was 85. Why the huge discrepancy? He suggested that the NCC inform its board that the situation was not feasible. The NCC was in effect sitting with a business plan that could not be implemented. He pointed out that the staff bill of the NCC almost used up its entire budget. Emphasis should be on the sole mandate of the NCC which he regarded to be huge.

Mr Mohamed stated that the NCC did not have a board. The accounting authority of the NCC was the Commissioner. He as the Commissioner reported to the Minister of Trade and Industry, Mr Rob Davies. 

Ms Mabuza explained that the 182 figure was a baseline structure for staff at the NCC. Workshops were intended to inform the public on issues. She noted that the NCC would be focussing on online internet activities. In 2016 the focus had been to look at issues of bread labelling. For 2017 the focus was on used motor vehicles relating to people’s rights when purchasing them. The idea was for workshops to be focussed. People should also be teachable. She considered it important how the NCC needed to leverage its sister regulators and provinces. The NCC needed to speak to issues that were relevant and pertinent.

Ms Nkoana said that in 2016 the NCC together with the DTI had looked at the organisational structure of 182 approved posts. It was realised that the structure as it was, was not realistic. The structure needed to be redesigned. The NCC could only work with what it was allocated. Perhaps some posts could be abolished and other posts could be clumped together. The DTI and the Department of Public Service and Administration (DPSA) assisted the NCC on this process which was not yet complete. The DTI could review the mandate of the NCC if there were gaps in its performance and on its budget.

Mr Mohamed explained that the 182 posts was not the original structure of the NCC. The original structure comprised of 132 posts. The first Commissioner of the NCC had brought in an additional 50 people on a part-time basis. Just before the first Commissioner had left the NCC she had made the 50 part-time employees permanent. The Minister of Trade and Industry had made these employees part of the structure. The real figure for the structure was 132.

Mr M Rayi (ANC, Eastern Cape) stated that the Committee really needed to record the presentation of the NCC and the interaction with members. In this way when the Committee again met with the DTI issues could be raised with them. He agreed that the NCC had a huge mandate

but lacked resources to properly fulfil it. The NCC essentially had an unfunded mandate. The Committee needed to raise issues with the DTI. He noted that perhaps the number of entities under the DTI needed to be rationalised. He pointed out that the targets of the NCC were few compared to the huge amounts of complaints that were received. Members of the Committee regularly received complaints from the public. He personally had a complaint against the car hire company AVIS. Why were there only twelve investigations when the amounts of complaints were huge? Why had the NCC not met its mandate? He asked whether the Consumer Protection Act (CPA) was still effective given that it was almost ten years old. Was amendments needed? He also asked who funded the Ombud Schemes. How did the NCC interact with the Ombud Schemes? To what extent did Ombud Schemes favour consumers? He asked whether the NCC monitored Ombud Schemes. The NCC was asked whether it had a toll free number on which members of the public could contact it. He asked what the NCC’s relationship with the Presidency’s Hotline was. The briefing had alluded to the fact that most consumers were not aware of their rights. This meant that people especially in rural areas did not lodge complaints when they were wronged. He observed that it became evident that the NCC had financial constraints when he saw the few workshops that had been held on awareness. It was a difficult state of affairs. Awareness efforts needed to be intensified but resources were lacking.

Mr Mohamed did not wish to comment on the matter of the DTI rationalising its entities. On the CPA he stated that it only came into effect in 2011 so it was operational for six years. There were certain provisions of the Act that could be looked at. He did feel that the CPA was still sound. The NCC tried its best to meet its mandate but due to challenges it faced it was difficult. He pointed out that the NCC had been involved in the setting up of the Ombud Schemes. The NCC also did accreditation of codes of Ombud Schemes. There was an arrangement in the codes for the collection of funds from members. He provided an example of motor vehicle industry members paying subscriptions to the associations that they belonged to. This was where funding came from. The NCC also monitored other work. The NCC met with the motor vehicle industry on a monthly basis and received quarterly reports from them. The NCC therefore did work with Ombud Schemes. On awareness campaigns the NCC had run a major campaign on the safer paraffin stove campaign. He said that in SA many fires were caused by unsafe paraffin stoves. The campaign had covered six provinces. The NCC had partnered with the National Regulator for Compulsory Specifications (NRCS), the DTI and the Department of Cooperative Governance and Traditional Affairs (DCOGTA). Prior to the launch of the campaign the NCC had targeted a community. The NCC had dispatched inspectors door to door to check on the safety of stoves. In most cases it was found that stoves were non compliant and unsafe. People who used these stoves were poor and bought the cheaper more affordable ones. Suppliers located themselves conveniently on the outskirts of communities in order to sell the non compliant stoves. The NCC also did inspections of the businesses that sold the stoves. The assistance of the South African Police Services (SAPS) was also called in. The NCC also held workshops on how best to use paraffin stoves. Youth from local communities were engaged and were appointed as assistants to assist with surveys done. The NCRS together with the DCOGTA had donated compliant stoves to communities. The event ran for a week. There were a great deal of participants and even the Minister of Trade and Industry, Mr Davies had been there. 

Ms Matomela (DTI) on the Presidential Hotline issue stated that complaints that came to the DTI were referred to relevant entities.

The Chairperson said that the DTI had not established the NCC. Parliament had established the NCC and had placed it with the DTI.

Ms Mabuza responded that the NCC had a great deal of unfunded mandates. She said that the NCC could not afford to fund the Opt-Out Register. The NCC had also done inquiries into the timeshare industry and had tried to prosecute. The NCC realised that it would not win the cases if prosecution went ahead. The NCC ended up at the high court for taking the timeshare industry to the National Consumer Tribunal. The NCC could not afford to defend itself in the high court. When the NCC took action on cell phone companies the legal advice received was that it would be tied up in court for the next twenty years. The NCC opted to partner with the Independent Communications Authority of SA (ICASA) on the matter. The NCC lacked the funds to push back hard. On the CPA the NCC had in 2016 done research on how much inroads had been made over the past five years. The NCC had gone to the Limpopo and Eastern Cape Provinces and had found that people did not know what their rights were. The NCC realised that it needed to find creative ways to speak to people. Community radio stations were an option. The DTI also checked on whether the CPA was making an impact as it should have. The DTI would also do research to evaluate the NCC. The NCC had considered a toll free number but simply could not afford it. A discussion with operators was taking place but the NCC did not wish to seem weak by asking for handouts. Perhaps a subsidy could be the answer.

Mr L Magwebu (DA, EC) pointed out that the NCC was a creature of statute formed to protect the consumer. There needed to be a biase towards the poor and vulnerable. Should funds used for research on online internet activities not rather be used to create greater awareness of the NCC? He personally had never heard an advertisement about the NCC. The NCC was asked why in rural areas there were no investigations into matters that affected people. People in rural areas would not benefit in any way on efforts on online internet activities and on the purchase of used motor vehicles. Bigger issues were that the poor and vulnerable was being affected by illegal deductions from their social grants. The courts had made determinations that legal deductions from social grants could continue. These types of issues should be a priority for the NCC. Internet and motor vehicles were not a priority for the poor.   

Mr Mohamed stated that the mandate of the NCC was so broad. He agreed that vulnerable people needed to be focussed on but that a balance needed to be found. He noted that most people had cell phones and were affected by data expiry. People queued up to buy R5 data. It was an issue which affected all consumers. It involved big money and the poor were affected. He asked whether one could really ignore the online transaction issue. The NCC received complaints on it. He conceded that it did not really affect the really vulnerable but nevertheless a balancing act was needed.

Ms Mabuza said that the NCC had received a complaint about the issue of deductions from social grants. She explained that financial transactions were dealt with by the Financial Services Board and the National Credit Regulator. It was not part of the NCC’s mandate. The issue relating to internet transactions was about people purchasing insurance and not receiving their contracts. The CPA spoke about a five day cooling off period where a purchaser could cancel the contract. The issue also applied to holiday deals that were purchased online. The purchaser needed to receive a copy of the contract. 

Mr M Chabangu (EFF, Free State) felt that the NCC had received an unfairly huge mandate coupled with a small budget. Perhaps the Committee needed to address the issue with the DTI. He asked why there were some provinces which did not have consumer courts. Was there a financial reason for this? The NCC was asked what consumer courts did about foreigners who were street vendors and who sold drugs.

Mr Mohamed on why some provinces did not have consumer courts explained that the challenge sometimes lay with the province itself. Some provinces did not place consumer protection high enough on their agendas at political level. There was also the issue of a lack of resources. There were consumer courts in the Gauteng, Free State, North West and Mpumalanga Provinces. One had been launched in the Limpopo Province. 

Ms Mabuza stated that the licensing of businesses fell within the mandate of municipalities. Street vendors felt outside the mandate of the NCC. 

The Chairperson said that he was interested on the work that the NCC did on the Ford Kuga matter and on funeral schemes. He had in his previous job done work on funeral schemes. Was the NCC doing any work on the sugar tax and on the possibility of it becoming law? He also asked whether the NCC was looking at protecting consumers when it came to illicit goods like cigarettes.

Ms Mabuza explained that on illicit goods there were two categories. The first was grey goods in terms of their labelling. The second category covered counterfeit goods. Counterfeit goods were covered by the act on standards. The NCC required that goods needed to state its country of origin. The NCC was assisted by the South African Revenue Services (SARS) at ports of entry. The NCC together with the SARS checked on whether there was compliance. Suppliers were checked on whether there was proper labelling and whether there was disclosure of grey goods. On whether the sugar tax became legislation it all depended upon parliament approving it. The NCC did not have a mandate to intervene. The NCC could come in when it came to volumes of sugar, its labelling and on matters of disclosure.

The Chairperson said that he had recently received a message on his cell phone where Cash Crusaders was offering him a loan. He queried with DTI whether Cash Crusaders was allowed to send him the message. The response from DTI was that Cash Crusaders were not allowed to send the message. He noted that he was often frustrated when telemarketers pestered him on his cell phone. He appreciated the efforts of the NCC to come up with the Opt-Out Registry. He was aware that big companies had the means to keep the NCC tied up in courts for years. The best thing was to try to deal with matters through adjudication and negotiation instead of animosity. People with financial means would continue to undermine the rights of the poor. He said that the Committee appreciated the efforts of the NCC but still required it to do more.

Committee Minutes

Minutes dated 10 May 2017 was adopted unamended and minutes dated 24 May 2017 was adopted as amended.   

The meeting was adjourned.

 

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