Consumer Protection Bill [B19B-2008]: deliberations & voting

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Trade, Industry and Competition

16 September 2008
Chairperson: Mr B Martins (ANC)
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Meeting Summary

The Committee deliberated on amendments proposed by the Department of Trade and Industry, according to the new draft tabled which had amended clauses 1, 2, 4, 14, 22, 24, 40, 50, 51, 56, 70, 87 and 119. The Department and the State Law Advisers went through these provisions. Clause 1 focused on definitions, and the Committee queried why the definition for “goods” was not included in the final amendments. The Department explained that not all the amendments that were discussed previously were included in the final amendments. Clause 2 looked at interpretation of the Act. Members wondered if issues around the chemical business in the clause could be deleted and included in another clause. The Department stated that it could include the chemical issues in clause 55, which dealt with safety issues and the consumer's right to safe, good quality products. Clause 5 dealt with the application of the Act. The Committee asked why the State had been excluded from certain provisions in the clause. The Department stated that they felt that the State was in a position to exercise its own discretion and to liberate small businesses that were dependent on suppliers and franchises.

Clause 14 centred on expiries and renewal of fixed-term agreements. Members remained concerned that certain small businesses would not be able to use this clause for protection if they wanted to cancel certain transactions or contracts. The Department explained that the clause had been specifically drafted to exclude business-to-business transactions, because of the practical difficulties inherent if one supplier should cancel the fixed-term agreement to supply goods on short notice. The Department explained that in terms of the Bill, all small businesses that fell in to the threshold determined by clause 6 would be generally protected, but the intention was not to disrupt business-to-business transactions but to protect individual consumers whose circumstances had changed and who could no longer comply with a fixed-term agreement. Clause 22 looked at the right to information in plain and understandable language, and now specified that the Commission should publish guidelines for methods of assessing whether a document satisfied certain requirements, while limiting this requirement to certain documents only.

Clause 24 related to the labelling of products that included genetically modified organisms. The Department assured the Committee that they would refer to any other legislation that addressed genetically modified organisms when dealing with the issue of labelling. Clause 40 dealt with unconscionable conduct. Members wanted to know why the Department opted not to use the word “duress” in the clause, and the Department explained that they preferred to expand on the definition of the word, as there were not many people who understood what “duress” meant. Clause 50 centred on written consumer agreements, as there were certain agreements that were required to be in writing. Members were worried that oral agreements might not be recorded, but it was clarified that the Minister would have the power to decide what records should be kept and the timeframes. Clause 51 amendments were initiated by the banking institutions, who had persuaded the Committee that there were certain legitimate transactions in which they might require the customer’s Personal Identity Number, and who had therefore been granted exemption. Members asked that the Department look at new wording to limit that to certain transactions only. Clause 54 dealt with consumer's rights to demand quality service. The Committee wanted to know how a person who had acquired services from a professional such as an accountant or a lawyer would be able to get a remedy for defective services, and whether this clause might negate the system of self-regulation within the profession. The Department responded that it did not think that the clause had that effect, but did provide alternatives.  In Clause 56(2)(b) the Department had deleting the words “at the option of the supplier”. Clause 70 focused on alternative dispute resolution, and the original draft had now been replaced with more explicit wording to show how alternative dispute resolution could work.  The Department had now amended Clause 87 so that the Minister would have to consult the Committee on Trade and Industry before appointing a Commissioner. Members discussed whether the Deputy Commissioner had to be both qualified and experienced, and the Department indicated that it wished to broaden the qualifications as much as possible. There was substantial discussion in relation to Clause 119, and during the adjournment the drafters re-examined the original and revised drafts. Finally it suggested that “conclusive proof” be omitted and substituted with “prima facie” and that “unless the contrary is proved” be omitted as well.

An important new provision was the recognition that there needed to be a transitional period of eighteen months while the Short Term Insurance Act and the Long Term Insurance Act were brought into alignment with the Consumer Protection Bill. The dti also indicated that the Commission had to allow time for proper implementation as previously there had been complaints that legislation had been signed into law without the necessary regulations being in place. This period also allowed for public consultation on the drafting of these regulations. The dti was asked to present an implementation plan for this Bill to the Committee as there were far reaching policy directives for both consumers and service providers and suppliers. 

Meeting report

Consumer Protection Bill (the Bill): Department of Trade and Industry (dti) proposed amendments
Ms Zodwa Ntuli, Deputy Director General: Consumer and Corporate Regulation Division (CCRD) of the Department of Trade and Industry (dti) stated that the proposals that the Department would make today in respect of amendments did not deviate from what it had proposed to the Committee in previous meetings. She added that the Department’s legal adviser had discussions with the Parliamentary Legal Adviser and the State Law Adviser about the proposals; however, there may be issues that the legal adviser would touch on that were not mentioned before. These issues could have stemmed from the consequences of certain amendments that were made to some clauses. The Legal Adviser would explain the rationale behind the amendments.

Mr Johan Strydom, Senior Legal Adviser: Legal Services, dti, added that there had been extensive discussions about the Bill as well as public hearings. The dti had to respond to and take certain policy stances on proposals made in these public hearings by the different stakeholders. The document now tabled showed the stance taken, and indicated possible amendments that could be brought about. The proposals were made in consultation with the State Law Adviser and the Parliamentary Legal Adviser; therefore were a collective perspective.

Mr Strydom read over the amendments clause-by-clause.

Clause 1
Mr L Labuschagne (DA) noted that the Department had agreed that the definition for the term “goods” would be amended to exclude anything that was considered a service; however, the term had not been amended in the definitions clause.

Mr Strydom pointed out that not all the amendments that were proposed by the Department previously were included in the final amendments to the Bill. He suggested that the Committee raise issues at the end of the session about amendments that were not accommodated.

Mr Labuschagne proposed that Mr Strydom list the amendments that were discussed previously but not included in the final amendments.

Ms Ntuli requested that the Department be allowed to go through all the amendments explaining the rationale behind them. Thereafter, they would indicate the amendments that were not included in the final proposal.

Professor B Turok (ANC) wondered if, for the sake of the public, a schedule could be drawn up indicating what was and was not included as a service, and the rationale behind the decision. He said there were many kinds of peculiar services that were offered in the market, and no one really knew about them.

The Chairperson told the Department to make a note of the suggestion and to see how they could make it easier for the general public to follow.

Clause 2
Prof Turok noted that this clause, dealing with the interpretation of the Bill, was the most important, as it set out where the Bill stood and what it was about. He was unsure of whether the clause should include the portions about chemicals. The key issue was that this clause would state exactly where a judge would find answers to conflicts. He wondered if it was possible to add the parts that spoke about the chemical business in another clause. He wanted to know who would decide if the Consumer Protection Bill contained more stringent provisions than any other possibly-conflicting Bill, as this might be contentious.

Mr Strydom stated that this was a consideration of policy and it was ultimately up to the Committee to decide upon. His colleagues advised him that this might not be the opportune time to deal with the issues raised by Prof Turok. The Department was not suggesting that the sentiments of the chemical industry would not be addressed, but there was a possibility that this could be included in clause 55 in the Bill, that dealt with safety issues

Clause 5
Clause 5 looked at the application of the Act. Prof Turok accepted the changes but could not understand why the State was excluded in the way that it was. He asked for an explanation.

Ms Ntuli answered that the Department had highlighted in a previous presentation that they wanted to protect vulnerable consumers. That was why bigger businesses were excluded from the opportunity to use this particular Act for their own protection. The Department felt that the State was in a position to exercise its own discretion and to liberate small businesses that were dependent on suppliers and franchises.

Clause 14
Clause 14 addressed the expiry and renewal of fixed-term agreements. Mr Strydom stated that the amendment to subclause (1) stated that this clause did not apply to transactions between juristic persons, regardless of their annual turnover or asset value.

Prof Turok asked if this meant that small companies could not “resort” to using this section.

Mr Strydom stated that this was indeed the case. At the moment small companies were seen as juristic persons as opposed to natural persons, and they entered in to transactions irrespective of their annual turnover or their asset value. The moment a company was seen as a juristic person as opposed to a natural person, and the moment they entered in to a transaction irrespective of the values of the assets, they could no longer resort to using this section for protection.

Prof Turok stated that he was not sure of the consequences of the clause. It seemed drastic, and it would undercut a great deal of the Bill.

Mr Labuschagne supported Prof Turok’s concerns. A Close Corporation (CC) was as vulnerable in business as a single person was. This clause would take protection away from the small CC’s. The threshold argument that the Committee had suggested be inserted, during earlier discussions, should be the test. A small CC or company that was a juristic person could be just as vulnerable as an individual. He thought that the Committee and the Department had to revisit the clause.

Mr Strydom stated that it was only the application of clause 14 that was being discussed here, not the protection that was provided by the Bill in general.

He explained that the intention of Clause 14 related to a situation where consumers were locked into fixed term contracts. The Department decided to exclude all business-to-business transactions, in recognition of the concerns raised by some stakeholders whose suppliers were small businesses. If those contracts of supply were to be terminated within twenty business days, it became problematic for the stakeholders to find replacement suppliers at short notice, especially if they were required to go through tender processes. Fixed term contracts were usual in the business world.

Ms Magauta Mphahlele, Tribunal Member, National Consumer Tribunal, stated that clause 14 did not only relate to renewals. It provided that there could be cancellation during the fixed term contract, but that the cancellation would be subject to penalties. Where there were business-to-business transactions involving negotiations around contracts and tender processes, it was difficult to calculate the penalties that they would have to pay.

Ms Ntuli added that clause 14 spoke essentially about consumer agreements. The intention was to exclude business-to-business transactions from the clause, because of the practicalities, and because it was considered that this clause should not cover business-to-business transactions where protection was being given to smaller businesses. The Department made the conscious decision to give businesses some protection, but not the full protection that would be afforded to individual consumers. The dti would have to balance and weigh the implications of whatever provisions would be inserted, but believed that if this clause were to be expanded broadly to include business-to-business transactions, there would be unintended consequences.

Prof Turok used an example of a professor who might engage in consultancy services, through setting up a CC or other business, therefore being regarded as a juristic person. He wanted to know if the professor, as a consumer, would be covered in the clause.

Ms Mphahlele stated that the professor would not be covered in terms of this clause, but would be covered in all other clauses.

Ms F Mahomed (ANC) asked what parameters the Department used in terms of determining which businesses would and would not be protected. She could not understand the logic of the clause.

Mr Fungai Sibanda, Chief Director, CCRD, dti, stated that in terms of the Bill, all small businesses that fell in to the threshold determined by Clause 6 would be protected. All franchises would also be protected. Clause 14 said that business-to-business transactions would not be covered because the Department had not wanted the possibility of disruption to business arrangements by giving small businesses the right to cancel long-term contracts by a twenty-day business notice. The Bill covered all small businesses and franchises, but the operation of Clause 14 was limited to non business-to-business transactions. He reiterated that allowing a twenty-day cancellation would cause specific challenges to businesses.

Mr Labuschagne stated that he would rather extend the period of time in which people and businesses were allowed to notify other businesses that they were going to cancel their contracts. The reality of commerce today was that there were many businesses in South Africa. The Department was essentially advising of protection on the one hand, but taking it away on the other. Dti needed to find a solution to this problem.

Dr S Rasmeni (ANC) noted that Clause 14 only related to the cancellation of contracts. He did not have a problem with the clause and wondered why the Committee would not support the amendment.

Prof Turok stated that even though the Committee did not want to hold up proceedings, they wanted the Department to have another look at the amendments.

The Chairperson stated that Members should pinpoint what exactly was wrong with the amendment.

Prof Turok tried to identify the problem by providing an example of a small CC of professionals that supplied services to Transnet. If Transnet created difficulties such as not paying the CC, and there was a breakdown in the relationship, he asked how this clause would affect the CC.

Ms Mphahlele stated that the example that Prof Turok supplied would not apply because small businesses would still be protected. The Department was saying that if the small business entered into a long-term agreement with a big supplier, and asked the supplier to provide it with a certain service, then neither business should be able to cancel the transaction by giving twenty-days business notice. There had been investment, and there would be difficulty in determining the penalty that the small businesses would face. The intention of the clause was to say that if an individual consumer entered in to a contract for three years, he should be able to cancel the contract because his individual circumstances (such as employment) might change, so that he might need to cancel the contract, although a penalty would be imposed. Currently a consumer who found himself in a changed situation could not cancel the contract, which meant he would pay for the full three years even though he might not need or be able to access the service. Small businesses were only excluded from the clause when it came to business-to-business transactions.

The Chairperson noted that the Committee understood what the Department was saying.

Clause 22
This clause spoke about the right to receive information in plain and understandable language. Mr Strydom stated that the amendments to the clause were technical but that they had consequences.

Prof Turok addressed Clause 22(3). He asked if this meant that all advertising by suppliers would be subject to guidelines by the Commission.

Mr Strydom stated that Clause 22(3) related to Clause 22(1)(b), which referred to plain language, documents and visual representation. There was a difference between Clause 22(3) and the proposed amendment, which was to substitute “may” with “must”. Clause 22(3) gave the Commission discretion to publish the guidelines.

Ms Mphahlele stated that where a consumer was to be given documents, these should be in plain language. The clause did not specifically talk about advertising. Clause 29 dealt with advertising, and general standards for marketing goods or services.

Prof Turok clarified that the Clause said that any supplier of goods and services had to provide any information to the public in plain language. If they did not, then the Commission would provide guidelines. This was a very far-reaching clause.

Ms Mphahlele stressed that the Department had used the term “prescribed” in the clause, which limited the application to “prescribed” documents only. The Dti foresaw that this would be far-reaching and therefore the clause had been amended to limit it to specific documents only.

Clause 24
The clause focused on product labelling and trade descriptions, and related to Genetically Modified Organisms (GMOs). The amendment, in Clause 24(6), stated that the packaging of goods had to display clear notification of the ingredients in the goods, specifically if they contained GMOs.

Prof Turok noted that the media was currently publishing a lot of news about GMOs. The situation was very complicated. The Committee was in favour of labelling; however, things seemed to have got out of hand, according to the press. He hoped that the Committee was right in calling for labelling, but he warned that the situation had become very complicated.

Ms Mahomed wanted the Committee to apply its mind to whether the Bill needed to refer to the agricultural legislation speaking of GMOs. In terms of default, she asked how the Department would handle companies that dealt with GMOs but did not label their products.

Ms Ntuli stated that the Department realised that they had to legislate for the long-term. Over time there could be other legislation that dealt with the same issues. The Department was saying that whatever legislation was applicable to GMOs, then the Department would be guided by it at any particular point in time.

Dr P Rabie (DA) added that the Committee had discussed the GMO issue in depth the previous week. He noted that if the Committee referred to the relevant legislation, then it would cover the entire spectrum of issues concerning GMOs.

Mr S Njikelana (ANC) noted that there were quite a few products with and without GMOs that needed different labelling. He wanted to know if Clause 6 reinforced labelling and if the labelling went beyond indicating the kind of GMOs that products contained. Research showed that there was already some labelling taking place.

Ms Mphahlele stated that there was already voluntary labelling taking place. This clause would give specific labelling directions to everybody involved in the production of goods. In terms of the specific amounts of GMOs contained in foods, the Department would refer to other legislation that dealt with the matter and other technical aspects.

Clause 40
The clause focused on unconscionable conduct. Mr Labuschagne wanted to know why the Department did not want to use the word “duress”, which was a legal term.

Ms Mphahlele stated that if a consumer read the word “duress” he would not know what was included in the definition. The Department indicated the instances where duress would apply rather than just using the word alone. She said that the consumers whom the Department was targeting would not necessarily know the definition of “duress”.

Ms Ntuli added that the clause as worded contained a better explanation of what the Department was saying. It was better to do this than use a word that may or may not be readily understood to tell people how they should conduct themselves.

Mr Labuschagne noted that the Department was being very explicit. However, he was concerned that something could be left out. He thought that if there was not a body of law that had decided upon a certain interpretation of “duress”, the Department should not merely leave it up to the court to decide what it was.

Prof Turok believed that there was no objection to the clause. It did give quite good guidance, and he did not think that the Courts would have any difficulties in making any findings.

Clause 50
The Clause looked at written consumer agreements. A new subsection would be added to the clause, and Mr Strydom read out the wording of it (see document).

Prof Turok stated that in many cases there could be a verbal discussion first, but no record kept by the supplier.

Ms N Khunou (ANC) stated that this record that the clause referred to could not be relied on. She wondered how long a record of information could be kept, in case there were problems.

Mr Strydom stated that it was mandatory for suppliers to keep records of transactions. If the supplier did not keep records, he or she would be seen as committing a statutory offence. The Minister should prescribe the necessary regulations for the records that had to be kept. The Minister would decide what the records should be, and the period for which they should be kept.

Clause 51
The clause looked at prohibited transactions, agreements, terms or conditions. Mr Strydom stated that the amendments were initiated by the banking institutions, who had pointed out that this clause would also cover transactions where the customer would have to make certain details available to the supplier before the agreement could be concluded. This clause proposed that the restrictions set out should not apply to a bank or other financial institutions, as it was an inherent part of their business that they should obtain these details from the consumer.

Mr Rasmeni wanted clarity on why the clause should not apply to those banking institutions.

Ms Mphahlele stated that the clause was attempting to deal with past abuses where, for instance, a lender, as a condition to the agreement, would require a consumer to furnish the Personal Identification Number (PIN) for his bank, and then the lenders would withdraw money without the express consent of the consumer. The Department was also trying to cover other instances where people would withhold important documentation, such as identity documents, from consumers until they did whatever the lender told them to do. The banking institutions had however informed the Dti that in order to facilitate certain transactions they did require a consumer to provide them with a PIN number. The Department recognised that this might be necessary for certain legitimate transactions conducted by legitimate financial institutions, and therefore agreed to their exemption from the prohibitions in this clause.

Dr Rasmeni commented that he had never come across an instance where a banker needed his PIN number.

Mr Njikelana stated that it would be helpful if the Committee could get an example of when a person would hand over their PIN number to a bank, as banks had the ability to access accounts.

Mr Sipho Tleane, Director: Legal Support and Prosecutions, CCRD, dti, stated that the Bill currently had some challenges; however, these could be cured by excluding reputable institutions such as banks because, in the first place, the provisions were not intended to regulate these institutions’ conduct.

Dr Rasmeni stated that the Committee understood the dilemma, but that the Department needed to find a solution to the problem. The institutions may be seen as reputable, but people were always falling prey to certain deals.

Mr Njikelana asked the dti to indicate to the Committee whether there was any protection within the banking and financial institutions. He wondered what would happen if a person somehow divulged his or her PIN to an employee working at a bank.

Ms Mphahlele agreed with these concerns, saying that the Department had held the same debates. The clause was trying to prevent situations where a person was obliged to give their PIN to somebody. She suggested that the Department redraft the amendment so that it dealt with the issue better.

Ms Ntuli added that the Department had attempted to deal with all elements of protection. She suggested that perhaps the Department could rephrase this to make the exemption apply to only certain types of recognised transactions.

The Chairperson noted that there was a general agreement that the dti should rephrase the clause.

Clause 54
The clause dealt with the consumer’s rights to demand quality service.

Prof Turok noted that he had raised the question at a previous meeting about whether the clause would include services provided by professionals such as engineers and accountants, and was told that it would indeed cover these. Having re-read the clause, he realised that it went further than he had thought. For instance, the supplier was required to remedy a defect on the quality of services, and provide a refund on a reasonable portion of a price. The Committee knew that in most cases the professions were self-regulated. He wanted to know how a person who had acquired services from an accountant or a lawyer would be able to get a remedy for a defect if something went wrong. He wondered if it was possible to get a reasonable proportion of the price refunded, and if this was what the clause intended. This could be a long-winded process.

Ms Ntuli stated that this clause covered what was termed “prohibited conduct”. The consumer would approach the National Consumer Commission to lay a complaint, and the Commission would then investigate it. If there was any disputes about the original price, the matter could be referred to the National Consumer Tribunal. The clause also provided that, as an alternative to the Commission, the matter could be resolved at the level of the sector Ombud, if one existed. The consumer always retained the option of going to the Commission or the Tribunal.

Prof Turok wondered if the different professions would say that this negated the whole system of self-regulation. He was worried that the Commission would be overloaded.

Ms Ntuli clarified that the Department was saying that if there was a problem with a supplier, who was subject to some form of voluntary regulation, then the consumer should be able to approach the supplier or his sector’s Ombud to resolve the issue. If the consumer was happy with the outcome, then the matter would go no further. However, the Department had to provide alternative solutions in case the consumer was not happy with the supplier’s decision. The Department was not trying to do away with the self-regulation process.

Prof Turok stated that in most cases the self-regulatory body of professions was a protective instrument for those people who had qualified in their respective professions. The self-regulatory mechanisms of the professions should not result in undue delays so that the consumer would have to wait years before they could approach the Commission. The Committee and the dti had to make sure that if there was a dispute, people behaved professionally.

Ms Mphahlele stated that the Department could insert a timeframe in Clause 69, in which a dispute had to be resolved, failing which it would be referred to the Commission.

Ms Ntuli added that the Department had introduced the process of the recognition of codes, but that the different professions’ codes had to be aligned to the Bill, so that the consumer could know that the standards of the supplier were the same as the standards applied in the Bill. Another remedy was that the supplier could offer the consumer certain services until the dispute was resolved.

The Chairperson noted that the Committee understood what the Department was saying.

The clause focused on implied warranty of quality.

Mr Labuschagne noted that 56 (2)(b) had to be amended to exclude “at the option of the supplier”.

Clause 70
Mr Strydom informed the Committee that the whole of the original Clause 70 had been rejected. The current clause dealt with Alternative Dispute Resolution (ADR).

Ms Mphahlele stated that the purpose of the new Clause 70 was because Members had complained that Clause 69 in the Bill did not tell consumers the process that they should follow if they had a complaint. The purpose of Clause 69 was to broadly outline how a consumer could enforce his or her rights and what institutions should be used. The comment about Clause 70 had been that this did not show consumers how they should follow the ADR process, but only said that if ADR agents could not resolve the dispute then they would have to terminate the process. If they resolved the dispute, they would sign a consent order. The clause had not explained what ADR was. Therefore the replacement Clause 70 was now expanded to say that a consumer could seek to resolve any dispute in respect of a transaction by doing what was outlined, and it was specified that a consumer could initiate a complaint to the Commission if the attempts at ADR failed. The Commission could then investigate. and matters could be referred to the Tribunal.

Prof Turok was not sure if the Bill made it clear enough that the consumer did not have to go to ADR. He did not want consumers’ applications to be rejected if they had not first explored all alternative options. ADR was a choice for the consumer who had confidence in that process.

Mr Strydom stated that the wording said that the consumer “may” seek to resolve the dispute, therefore, clearly there was no obligation to do this if the consumer did not want to.

Clause 87
Mr Strydom stated that the revised Clause 87 made provision for the Minister to appoint the Commissioner, after first having consulted with the Portfolio Committee on Trade and Industry.

Ms Ntuli proposed that the Committee discuss this issue further. She noted that many of the appointments made for institutions were invariably Cabinet approvals. The Department sought to find another mechanism where the Committee could be involved in the appointment.

Dr Rasmeni stated that a mechanism should be provided whereby the Committee could be involved in the appointment of the Commissioner.

Mr M Bhengu (IFP) stated that the clause was not being amended to take away the Executive power to appoint the Commissioner. All it was saying was that the process of appointment, prior to the final appointment by Cabinet, must involve consultation with the Committee.

Prof Turok noted that the word “before” was included in the amended Clause 87. This was very important, as it included the Committee in the appointment decision. The Minister could not appoint the Commissioner without consulting the Committee.

Ms Ntuli stated that the Department had asked the Committee what their thoughts were on the subject because it needed to know what direction to follow with the amendment.

The Chairperson stated that the Committee's responsibility was not limited to just piloting through legislation, but included ongoing oversight and implementation of legislation. Even after the appointment of the Commissioner, the Commissioner would still have to report in some manner to the Committee.

Prof Turok wondered if Clause 87(1) should be amended to include the qualifications needed for a suitable Deputy Commissioner.

Mr J Maake (ANC) wondered if “qualified and experienced” as set out in Clause 87(1) were exclusive factors, or if the candidate had to have a combination of being both qualified and experienced.

Mr Bhengu added that the term “industry” in Clause 87(5)(a) was too broad, as there were many kinds of industry.

Mr Strydom answered that the provision was crafted in such a manner that a person who qualified in any one discipline or type of industry mentioned in the clause would be eligible for appointment. A qualification in any one of the categories would suffice.

Ms D Ramodibe (ANC) asked if it would be inappropriate to remove all the qualifications listed in Clause 87(5)(a) and word it as “suitable qualifications and experience”.

Prof Turok stated that the dti could replace the word “in” with “such as” in Clause 87(5)(a), so that the sentence read “suitable qualifications and experience such as economics, law, commerce...”. He stated that it was useful to stipulate the areas with which candidates should be familiar, as it provided guidance.

Mr Maake stated that “such as” would mean that everything would be included. He wondered why there was a need to specify the qualifications. He agreed that the clause should be amended to only say “suitable qualifications and experience”

Ms Ntuli answered that the intention was to keep the qualifications as broad as possible so as not to restrict the amount of candidates. It was possible to rephrase the clause to say “suitable qualifications and experience”.

Prof Turok stated that the word “qualifications” immediately indicated that a degree or other academic qualification was needed for the position. However, somebody who spent his life in consumer activism, even without having a degree, would be a good Commissioner. He was not happy with the inclusion of the word “qualifications”; but thought the term “suitable experience” was fine.

Ms Ntuli stated that the Department would discuss the issue and come back to the Committee with a proposal.

Clause 119
Clause 119 dealt with proof of facts. Mr Strydom stated that this clause was something that had kept the Department busy for a while. He stated that Clause 119(1)(b) had to be amended, and read out new wording (see document). The Department wanted to make it possible, in criminal proceedings, for a prosecutor to provide a document that showed that the Tribunal had made certain orders on a particular day. The clause did not say anything about the correctness of those orders. According to Mr Strydom, the original formulation of clause 119(1)(b) was contradictory, as it had said that the proof was “conclusive” and this meant that the proof could not be countered. The Department wanted to make it possible for the prosecutor to say in court that he or she wanted to submit a document saying that an order was made on that particular date.

Adv Koleka Beja, Parliamentary Law Adviser, stated that she grappled with the use of the words “unless the contrary is proved”. She suggested that the sentence be removed.

Adv Theo Hercules, State Law Adviser, added that he was thinking of inserting the term “prima facie proof” in the clause and deleting “unless the contrary is proved”. This would allow for the contents of the order to be contested.

The Chairperson wondered if the issue would be solved by deleting the word “conclusive” in Clause 119(1)(b). The issue had to be addressed. He adjourned the meeting for an hour to give the legal drafters time to deliberate on this proposal..

On resumption of the meeting, Mr Strydom said that the legal drafters had all discussed the position, but had not had time to get the final set of amendments typed up but he would read out the new drafting of the specific clauses that had been changed by the Committee during the morning session.

Clause 2
The word “hazardous” would be inserted before “chemical products”, and the whole of this particular reference would be moved from Clause 2 to Clause 55.

He also suggested another amendment that would adequately protect consumers in terms of seeking alternative legal recourse. It would state: “No provision of this Act must be interpreted so as to preclude a consumer from exercising any rights afforded in terms of the common law”

Dr Rasmeni asked whether this would be inserted as Clause 55(7).

Mr Strydom replied that it might be necessary to include this as a separate subsection as it was a matter of transplanting the provision from Clause 2.

Clause 5
Mr Strydom explained that clause 5(2), from line 40 up to and including line 50, would be omitted from the Bill.

Clause 6
Mr Strydom noted the necessary consequential amendment in clause 6(1) due to the amendment of clause 5.

Clause 13
The words “appears to” had been omitted from clause 13(2)

Clause 22
Mr Strydom noted that the suggestion to substitute “may” with “must” in 22(3), as noted in the proposed amendments of that morning, would not be effected.

Mr Labuschagne said he was confused.

Mr Strydom said that the subclause would stay as is.

Mr Martins asked what the rationale for the retention of “may” had been.

Ms Ntuli explained that if “may” had been substituted with “must” the consequence could be that if the National Consumer Commission did not publish guidelines, then it could not enforce its regulations.

Mr Strydom explained that new subsection, 22(4) that would be added would also change from “must” to “may”:
(4) Guidelines published in terms of subsection (3) may be published for public comment.”

Clause 40
The word “duress” would be inserted in 40(1) in line 41 on page 36.

Clause 50
In clause 50(2)(b)(ii), “as prescribed” had been inserted at the end of the sentence (line 56 on page 42).

Clause 51
Mr Strydom noted that the dti suggested the following wording to cover the concerns raised by the Committee about banks and PIN numbers.

“(4) This section does not preclude any supplier to require any personal identification code or number in order to facilitate a transaction that in the normal course of business necessitates the provision of such code or number.”

This provided the legal basis for banks to request a pin number when an automated teller machine was used by consumers.

Ms Khunou said that many older South Africans could not read or write and had to be assisted by bank officials to open accounts or to conduct transactions. In light of this, she asked what safeguards had been effected to protect this vulnerable group.

Mr Martins said Ms Khunou had made a valid point, but that one would hope that there would be exceptions. Many South Africans that were illiterate had received assistance from election officials during national elections, but their votes were still regarded as secret.

Mr Maake said that as he understood it the law did not stop a person from volunteering his/her help, but that it stopped someone from demanding a PIN number from a consumer.

Clause 53
In Clause 53(1)(d), the word ‘design’ had been omitted (line 32 on page 45).

Prof Turok asked what would happen if an engineer had completed a building that met all the requirements, but had failed to stick to the initial design that had been presented to the owners. He asked whether such a scenario had been considered by the dti.

Mr Martins noted that characteristically it would not be part of it.

Clause 56:
In line 56 ”at the option of the supplier' had been omitted.

Clause 69
The whole of clause 69(1)(c)(ii ) would be omitted (lines 37 and 38 on page 52).

The motivation for this amendment was to provide a platform for a consumer to approach a Consumer Court as the dti did not want the consumer to be subjected to this directive if the supplier was not. The requirement thus fell away to make it more accessible for consumers to seek legal recourse.

The whole of Clause 69(2) would be deleted (line 48 up to and including line 54 on page 52).

Prof Turok asked whether this did not undermine some of the principles in the Bill.

Ms Ntuli replied that Clauses 69 and 70 were related as Clause 69 dealt with the avenues of recourse available to consumers whereas Clause 70 spoke of alternative dispute resolution (ADR).

Clause 87
Mr Strydom noted that the Committee's concerns about the wording of the qualifications for Deputy Commissioner had been attended to.

Clause 110
Mr Strydom explained that the dti had taken note of Cosatu’s submission and had thus omitted subsection (1) and substituted: “It is an offence for any person to alter, obscure, falsify, remove or omit a displayed price, labelling or trade description without authority.”

Clause 119
The dti suggested that “conclusive proof” be omitted and substituted with “prima facie” and that “unless the contrary is proved” be omitted as well.

Schedule 2: Transitional Provisions
Mr Strydom suggested that the following provision, Item 10, be included as part of the transitional arrangements of the Bill. Item 10 would afford stakeholders the necessary time to align their directives with the Bill and if not, then the provisions of this Act would prevail:

“10 The exclusion of the Short Term Insurance Act and the Long Term Insurance Act is subject to those sector laws being aligned with the consumer protection measures provided for in this Act within a period of 18 months from the effective date, failing which, the provisions of this Bill will apply.”

Mr Oliphant asked where this provision would be placed in the Bill.

Mr Strydom suggested that it should come after Item 9(5) on page 79, after line 23.

Mr Maake asked what the rationale for the 18 months had been.

Mr Strydom replied that in terms of the laws that had to be amended, it might be unfair to impose a shorter time span.

Ms Mphahlele added that the reason for the transitional period was that the dti had indicated that the Commission had to allow time for this to happen as previously there had been complaints that legislation had been signed into law without the necessary regulations being in place. This period also allowed for public consultation on the drafting of the regulations

Prof Turok said that his understanding and belief had been that there was and would be a lot of opposition to this Bill as it contained far reaching policy directives for both consumers and service providers/suppliers. In light of this, it would help the Committee a great deal if the dti could submit an implementation plan that had detailed time frames.

He added that Parliament's job was not only to approve legislation, but also to play an oversight role which required that Members had to be informed about pertinent issues at all times.

Ms Khunou asked whether the dti had the capacity to effectively implement and enforce the Bill, once it was signed into law.

Ms Ntuli replied that in a previous meeting, the dti had indicated that a business case would be submitted to the Committee that would detail all the questions raised by both Prof Turok and Ms Khunou.

Mr Maake asked what would happen in the event of a product being advertised as being on sale, but upon a request to purchase that product the consumer was informed that the item had been sold, but was then offered the same product from a different manufacturer at a higher price.

Ms Mphahlele noted that the approach in the Bill was not to make everything an offence as this might impede on the Tribunal's role. The scenario raised by Mr Maake had been adequately covered in the Bill.

Mr Sibanda responded to an earlier question by Mr Labuschagne who requested clarity on the definition of “fixed term agreement”. He noted that the dti had not defined “fixed term contracts” as the Minister had been empowered to impose regulations that would eventually be applicable.

Voting on the Bill
The Bill was passed with the amendments.

The Chairperson adjourned the meeting.



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