Accreditation Conformity Assessment Bill & Measurement Units & Measurement Standards Bill: Adoption; National Credit Act Regulat

TRADE AND INDUSTRY PORTFOLIO COMMITTEE
18 October 2006
ACCREDITATION CONFORMITY ASSESSMENT BILL & MEASUREMENT UNITS AND MEASUREMENT STANDARDS BILL: ADOPTION; NATIONAL CREDIT ACT REGULATIONS: BRIEFING BY DEPARTMENT AND NATIONAL CREDIT REGULATOR

Chairperson: Mr D Dlali (ANC)

Documents handed out:
PowerPoint Presentation by Dr J Erasmus: National Credit Act
PowerPoint Presentation by Gabriel Davel of the National Credit Regulator on s.73 of the National Credit
Accreditation for Conformity Assessment, Calibration and Good Laboratory Practice Bill [B29-2006]
Amendments Agreed to Accreditation for Conformity Assessment, Calibration and Good Laboratory Practice Bill [B29B-2006]
Accreditation for Conformity Assessment, Calibration and Good Laboratory Practice Bill [B29B-2006]
Measurement units and Measurement Standards Bill [B21B-2006]
Measurement units and Measurement Standards Bill [B21-2006]
Section 7 of Trade Metrology Act 77 of 1973
Government Gazette 21 September 2006

SUMMARY
The Department of Trade and Industry briefed the Committee on the changes that the legal drafters from the Department had made to clauses in the Measurements Units and Measurement Standards Bill. Questions were raised by Members on the travel allowances, and there was a long discussion on the fact that the drafters had included a provision that this legislation bound the State. This merely repeated the legal position and it was decided that there was no harm in leaving the clause in the Bill. The Committee decided to approve the redrafted version.

The Department of Trade and Industry then briefed the Committee on the recent changes made by the drafters to the Accreditation for Conformity Assessment, Calibration and Good Laboratory Practice Bill. The clauses had been reworked in line with suggestions made at the last meeting. The Committee was satisfied with the revised wording. It was noted that in time the South African National Accreditation System should become internationally recognised and be the sole authority for monitoring of the laboratories. It was noted that both of these Bills would be debated on 24 October.

The Department of Trade and Industry briefed the Committee on the Regulations to the National Credit Act. The National Credit Regulator also briefed the Committee, focusing on the information that would be affected by the Regulations. Both presentations set out the background to the Regulations, what was covered, how the procedures would operate and the considerations to be taken into account. Both indicated that a balance was being struck between essential information that was required for other purposes, and the rights of consumers. Questions were raised by members on manipulation of ID theft and fraud, default judgments and the responsibilities of the courts and credit bureaux, pressure selling, and the position of the banks. Members were concerned about how the public would be informed of the provisions of the Regulations, the audits of the bureaux, and how the courts, including the Small Claims Court, were being trained to implement the Regulations and Act. NCR and DTI would be invited back to the workshops that Parliament hosted at the beginning of next year.

MINUTES
Briefing on The Measurement Units and Measurement Standards Bill
Mr Johan Strydom, Legal Advisor: Department of Trade and Industry (DTI), briefed the Committee on the reworked clauses of the Bill.

Clause 5
Mr Strydom said that the principle of consistency was found to be problematic in this clause. There were two definitions, in the two separate Bills, dealing with the same matter but using different wording. Therefore the definition of “calibration laboratory” had been amended so that it made specific reference to a body accredited by the South African National Accreditation Systems (SANAS) or by an accreditation body enabled in terms of the Conformity Assessment, Calibration and Good Laboratory Practice Act of 2006.

Clause 13(3):
Mr Strydom noted the substitution of the word “Board” by “National Metrology Institute” in relation to payment for out of pocket expenses. This amendment was based on the conditions of appointment, remuneration and allowances of the board as organ of the National Metrology Institute.

Clause 19 (3)
Mr Strydom said that the amendments that he tabled were based on the performance agreement’s targets, and therefore listed the areas to be covered by the performance agreement.

Clause 25
Mr Strydom stated that the whole of this clause, which dealt with offences, was now to be deleted. These offences were also found in the Promotion of Access to Information Act 2000 and there existed no need to duplicate them. Therefore Clause 25 (2) would in future be renumbered as 25 (1).

There was still an offence in relation to the misrepresentation of data or symbol of the National Metrology Institute.

Discussion
Mr S Rasmeni (ANC) asked whether Mr Strydom could give more clarity on Clause 13 (3) on the reimbursement and allowance that came out of the pocket of the Department. He enquired whether it included travel for governmental purposes.

Mr Strydom responded that the clause only dealt with members who did not receive reimbursement or allowances. It included subsistence and travel expenses.

Ms M Ntuli (ANC) asked for clarity on the notion expressed in Clause 26 that the Act binds the State. This was the first time she had seen such a clause and concerns were raised about it.

Mr Strydom responded that not all Acts included such a provision and there might not be a need to have a Clause to that effect. According to the Constitution the government was bound by the law, and thus the State would be too. This could be seen as an expression of the Constitution.

A representative from the DTI added that the State could never be above the law. There were no adverse implications in this clause, which reflected the Constitutional provisions. 

Mr Strydom added that this sentiment was included to stress to the ordinary citizen that the State expressly committed itself to be bound by the law of this country.

Ms Mohamed commented that there should be a standard way of drafting Bills.

Mr N Godi (PAC) asked for further clarification and asked that a compelling written argument be put forward for departing from the standard drafting style. 

Mr L Labuschagne (DA) asked whether “the State” referred to some officials, or the clerks who worked for the government. The fact that law binds the state was of no danger to the State, and he agreed that the ordinary person should know this. He felt that no further time should be spent on the issue. 

The Chairperson commented that this was a very important issue and therefore the loose ends must be tied up.

Ms Mahomed agreed with the Chair and saw no reason why the Clause should be left out.

Mr Godi said that if there was a general agreement that the law binds all, then the inclusion of this clause was unnecessary.

Mr Strydom highlighted the importance of the debate based on the spirit in which the Bill was written. He was satisfed with the wording of the Bill. 

Dr J Erasmus, DTI Consumer and Corporate Regulation Division, believed that perhaps the wording should be rephrased. 

Ms Ntuli stressed that she believed the Clause should be removed. 

Mr Strydom stated that the principle would remain the same, whether or not specifically stated in the Bill. He stated that drafting styles were not totally consistent. He suggested that Clause 26 simply be deleted.

The Chairperson believed that the Committee should not delete the references to the responsibility of the state.

The Committee agreed that the version of the Bill presented by Mr Strydom should be adopted.

Briefing on the Accreditation for Conformity Assessment, Calibration and Good Laboratory Practice Bill
Mr Strydom took the Committee through the proposed changes to the relevant clauses of the Bill.

Clause 1
Mr Strydom noted the amendment of the definition of “verification laboratory” as one designated in terms of the Trade Metrology Act 77 of 1973. He pointed out that Section 7 (2) of the Trade and Metrology Act 77 of 1973 referred to bodies that were designated, and the South African Bureau of Standards was designated by this Act.

Clause 5
The rewording was of a purely technical nature, and merely changed the sequence of the subsections for better reading.

Clause 8
This clause had been amended so that the phrase “the population of the Republic” was replaced by “the demographics of the country, including with regard to gender and disability”.

Clause 10
In this clause the former subparagraph (a) had now been omitted, to now allow non-South African members to became part of the Board.

Clause 11
The principle of remuneration of members of the Board was found to be problematic. The reworked clause now provided that remuneration should not be fixed by a particular Minister but must be done in consultation with the Minister of Finance.

In addition, provision was now made for non-executive members to be appointed on a part time basis.

Clause 18
This clause had been reworded so that the principle of agency was expressed more clearly, indicating that functions were performed “for and on behalf of SANAS”. He reiterated that SANAS was defined as the South African National Accreditation System.

Clause 21
The rewording of this clause clarified that the SANAS financial year ended on 31 March.

Clause 27
Mr Strydom explained that all the words after the description of the offence in subparagraph (3) had been omitted, and references to failure to comply with Sections 24, 27 and 28 had all been included. This allowed for a clearer spelling out of both the prescribed prohibitions and penalties. He explained that both the nature of the prohibition and penalty would have to be clearly described in the legislation.

Discussion
The Chairperson stated that the changes seemed to be consistent with the concerns raised in the last meeting.

He stated that the Committee would table a motion that it was desirable that SANAS be internationally recognized, and that SANAS should become the only accredited body in the Department to deal with the monitoring of laboratories. The Bill would form the foundation.

The Committee agreed to pass the amended version, without proposing any further amendments.

The Chairperson stated that both Bills would be debated in the House on 24 October.
 
Briefing on Regulations to National Credit Act by Department of Trade and Industry
Dr Erasmus stated that the regulations under Section 73 of the National Credit Act were drafted as a response to the call for general amnesty for blacklisted debtors. The National Register that would keep a record of all national credit had been established and the data was presently under construction.

In his presentation Dr Erasmus gave the background to the enabling Section 73, the procedure that had been followed in getting input from all stakeholders, and the process of clean up and verification. He listed the various steps that would be taken and indicated the rights consumers would have in accessing the records and in bringing matters to the Credit Bureau. He also listed the steps to be taken by the Credit Bureau. It was noted that any regulations made would have to be submitted to the relevant Parliamentary Committee for consultation, prior to promulgation of the regulations. Removal of data on record as at 1 September 2006 would be done in a phased manner, and would be concluded by 30 November 2007. The twelve-month process would commence on 1 December 2006. Adverse information relating to debts of less than R500, as well as to accounts that were effectively dormant for a period of 24 months preceding 1 September 2006, would be removed. The same applied to certain judgments, as some paid up judgments would be removed. The regulations set out the circumstances under which a person could inspect the records. Audits would be conducted, and their scope and timing was set out in the presentation. 

Briefing on the information affected by the Section 73 Regulations
Mr Gabriel Davel, Chief Executive, National Credit Regulator, conducted the briefing and explained that the Minister of Trade and Industry must consider the predictive nature as well as the socio economic impact on consumers. A balance must be struck between removing the information that had a negative impact on consumers, without undermining the integrity of the financial system. He also noted that the removal of information must be careful not to increase the risks of over indebtedness, fraud, and the increased costs of finance. Removal must not undermine small enterprise and housing credit, as there should be sufficient information left to assess applicants. He noted that a number of the other provisions in the Act impacted upon the credit records of consumers. He explained how exactly the regulations were striking a balance, and noted that payment profiles multiple judgments, recent judgments, adverse information, and large amounts would be left, and time was allowed for adjustment. In conclusion, Mr Davel explained how the Minister would assess the impact on consumers.

Discussion
Prof B Turok (ANC) congratulated the team on their work. He highlighted four points of importance, which required comment. The first point that was raised was the reference to manipulation of ID theft and fraud. The second point was whether the position with regard to default judgments could be specifically included in the law. Thirdly Prof Turok said that “pressure selling” was becoming a problem and asked whether anything could be done about it. He also enquired whether anything could be done in the interim to discourage pressure selling. Fourthly he highlighted that banks were concerned about their risk, yet were making substantial profits.

Dr Erasmus responded on ID fraud, saying that the National Credit Act did not deal with this phenomenon. The credit provider was responsible for any risks and the victim had no stand in this.

Mr Davel provided further input on ID issues. He said there were two core issues. The first was that in magistrate’s courts many of the judgments recorded included no ID numbers. Credit bureaux, in many cases, would also only record addresses, and so up to 20% of default judgments had no ID numbers. The rule was that the credit provider should provide an ID number in its summons. There was poor information exchange between public and private sectors. Both the credit bureaux and the Department of Home Affairs were experiencing problems in this regard.

With regard to default judgments, Dr Erasmus noted that the credit bureaux should inform consumers, so that they, and not the courts, bore this responsibility. The regulations set out in the National Credit Act made provision that if credit bureaux had added on certain charges, then they must clean up and verify records if they have any judgments. The remaining verified debt that had not been paid would be the responsibility of the consumer who must then pay.

In regard to pressure selling, Mr Davel indicated that the National Credit Regulator (NCR) had done a study inquiring as to the current situation.  Presently the NCR was unable to do anything about such selling because the creditors acted well within their scope and had done nothing against the law.

In regard to banks, Dr Erasmus stated that DTI had told the banks that they had no reason to complain. Banks had 18 months at their advantage in terms of consumerism. Reckless lending provisions were being put into place for credit providers to assess the background of consumerism.

Mr Davel said that credit allocation was challenging for banks because they were much cheaper than micro loans. It was found in a study that micro lending was not growing while on the other hand bank credit cards were rising. There was a substantial amount of competition in the market between banks and micro lenders. The NCR did not want to interfere in the market. Clear awareness should be promoted in the public domain. There should be an indication that non-compliance with the current law was part of the problem and therefore one should be cautious not to interfere in the market.

Mr Labuschagne raised a point on the paid up judgments. The fact that one had paid the judgment debt was a proof of payment. He asked whether there were any plans to roll out the substantial information contained in these presentations to consumers.  The consumers who were buying seemed to be at a disadvantage because at the end of the day they were the ones who were defaulting.  He asked who the auditors were and how they managed the points raised.

Dr Erasmus said that the credit bureaux had their own independent auditors and they bore the cost of auditing. A report had to be forwarded to the NCR who would assess the quality of the report before accepting it.

Prof Turok questioned the obligation of the justice system in that situation. He pointed out that often the victims of fraud were not physically present to make any representations or get assistance. He therefore wondered whether the courts should not also make appropriate orders with regard to the victims.

Mr Gabriel responded that the credit provider was responsible for fraud committed against the victims. In many cases victims were not aware of the fraud taking place. In numerous cases money was removed from their account, the police were not proactive and in many cases were unable to deal with the fraud. This would then result in the victim not being able to get any credit. Where banks were involved, they had an obligation to the client. The onus would be on the credit provider to deal with fraudulent aspects.

Mr S Maja (ANC) raised a concern about the illiteracy and poverty in townships, and asked how the National Credit Regulator and the DTI would disseminate information to people.

Mr P Sitou, from the NCR, responded that there were new provisions relating to default judgments, which would kick in in June 2007. Those provisions set out the procedure before debt cases were taken through the court process. The creditor was obliged to follow those processes. There were checks and balances in place which served as protection measures, and were built into the Act. The Act in itself was sufficiently elaborate.

In response to Ms Maia’s question he responded that NCR had strong relations with DTI. The notion of pressure selling had emerged in the strategy meetings. The Act did have provisions to deal with this aspect. He noted that action programmes had been implemented to make consumers aware of pressure selling. Awareness and education was taking place and there was already a strong working ethic exhibited within provinces. NCR had a priority focus on creating more awareness, through including NGOs, community based organisations, employers, unions and media strategies such as radio advertising campaigns. Magistrates and clerks were also made aware of the Act. The Justice Colleges had also been asked to co-ordinate their efforts in providing training on the Act, in order to ensure maximum input.

Mr Labuschagne raised concerns regarding informing the public about the legislation’s strategies, and expressed his cynicism. He asked whether the DTI and NCR would check how provincial offices were doing their work in notifying the public of their rights, and whether a report could be made on what had been done. He felt that communication through the churches and community radio stations should be concentrated on.

The Chairperson agreed with Mr Labuschagne that these rules and regulations were good. The challenge however was their implementation.
 
Mr Sitou responded that awareness programmes were run jointly with high-level corporations. He agreed that churches were a good starting point and that both community and national radio stations were easy channels to use.

Mr Godi raised the issues with regard to default judgments. He pointed out that the Magistrate’s Court Act governed magistrates but there should also be an inquiry into Small Claims Courts. He asked the NRC to comment on the synergies between the two different pieces of legislation.

Mr Davel replied that the NCR had discussed with the Justice College the issue of provision of training to magistrates on the Act. Legal consultancies had also been briefed on how the Act would interact with the Magistrate’s Court Act. This development of this aspect would take time.

The Chairperson stated that NCR and DTI would be invited back to workshop similar to those that Parliament hosted at the beginning of the year.

The meeting was adjourned.