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PORTFOLIO COMMITTEE ON TRADE AND

INDUSTRY

19 October 2011

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DelegationMs Mohlala – National Consumer

Commissioner

Mr Kgabo Mantsho - Chief Financial Officer

Ms Prudence Moilwa - Head: Enforcement and Investigations

Ms Phumeza Mlungu - Director: Stakeholder Management and advocacy

Mr Itani Ndou - Director: Human Resources

Mr Ntseileni Netshitoboni - Director : Information and Communication Technology

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Purpose To give an update on the following issues as raised by the Portfolio

Committee in July 2011:

a) Capacity of the NCC to fulfil its allocated functions, the process to

address this and challenges in this regard.

b) The NCC's plans and progress on its public awareness programmes.

c) The potential to establish and strengthen consumer protection groups.

d) Status on complaints and/or allegations received thus far, as well as

possible challenges in this regard.

e) Finance – Late payments of suppliers –budgetary constraints-impact

on delivery

f) IT – NCC website – Finalization

g) Cooperate Services – Operational plan

h) New office – location for NCC

Contents

• Advocacy Awareness and Education unit report;

• Complaints Handling and Investigations unit report ;

• Human Resources unit report ;

• Information and Communication Technologies unit report;

• Finance unit report

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Advocacy Education and Awareness Plan

2011/12

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NCC plans and progress on public awareness programmes

• Background

• Donor funding application made to USAID; not

successful;

• 5 unemployed graduates recruited to the CPA;

• Have approached COGTA for NCC to participate

within the Community Works Programme.

• Developing deconstructed booklet on the act in a

story book format

• Looking @NLB for possibility to fund the CPGs

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WorkshopsACTIVITIES REACH

CATEGORY

2 Stokvel Workshops 255 Women

3- day Workshop; dept of Public Works

233 Government officials

1 Worskhop; PTA Post Office 14 Business

1 Church based workshop; Kagiso 25 Peri - Urban Community/ church members/ Business

2 Constituency Workshops; Diepkloof

155 Youth, women’s league, community

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Media EngagementsMedia has a huge appetite for NCC work:

• Have prepared media responses for the Argus, The

New Age, Strategic Marketing Issues, Independent

Newspapers, Rapport etc.

• Have conducted interviews in both print and

electronic media:

– Sunday Times, The Times, BHF COSA Media, The New

Age, Mail and Gaurdian, IT Web

– E-tv, radio702, Ilungelo lakho, Khaya FM, Legwala-gwala,

SA FM, Carte Blanche, SABC News

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Potential to establish and strengthen consumer protection groups

• Activities to date

• Have completed an in-house study into the state of

readiness of NGOs;

• Been through all nine (9) provinces, 28

organizations surveyed;

• Seminar conducted;

• Report and guidelines by end of October 2011.

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The Potential to Establish and strengthen Consumer Protection Groups

Elements of guidelines

Different categories of CPGs to include:

• Individuals currently undertaking consumer training on the

CPA;

• Companies training service providers i.e. ADR agents;

• Money lending organizations fronting as advice offices

• High turnover of staff and continuity;

• Cross subsidization of funding for consumer.

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Challenges• Budgetary constraints;

• Failure to reach rural consumers; high cost

• Education material in languages and format for rural consumption

• Human resource challenges

• Failure to reach consumers categorized ito s 3(1)(b) of CPA

• Establishment of standing advisory committees compromised

• Funding to capacitate consumer protection groups compromised

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Complaints Handling

Unit

Complaints Categories – 7 086

no Subject Work stream One

Work stream Two

Work Stream Three Work

Total

1 Motor Vehicles 754 519 448 1819

2 Retail 636 202 325 1263

3 Telecoms 650 307 91 1059

4 Property & Timeshare 410 192 179 781

5 Government and Municipalities

285 8 168 461

6 Travel and tourism 210 51 38 299

7 Promotions 89 102 39 230

8 Financial services 285 260 150 695

9 Medical Services 82 4 23 109

10 Fitness Centres 109 39 28 176

11 Education 125 27 42 194

Complaints' handling

Work Streams

Responsibilities Work load Output Personnel (current)

Needs

1 Call centre -

Acknowledgements Letters respondents

390 Calls per day –1 950 per week -7 800 per month

11 495- -Written Complaints/ advice – to date

1 332 - Request for Advice 1 126 - Reformulations

7 246 - Complaints Acknowledgements Letters sent to respondents

5038 - sent by email 3589 - Courier service & Hand delivery 2 345

250-Consent Agreements

78 Compliance Notices

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2 The responses received from the suppliers are assessed-Follow-ups Consumers updated on the responses receivedBulk Disposal/ resolutions- Meetings with suppliers to resolve complaints

Responses 3 800

Supplier reply to 75 % of matters forwarded to them Positive responses 10%

Bulk disposal -96 -560

368 -Consent Agreements

90 -Compliance notices

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3 Amicable settlement of the ComplaintNotices of set-downConciliation proceeding done in terms of the guidelines

500 Conciliations Conducted in Quarter2

8 Average -5 face to face Conciliations done per day

1 631 – to be set down – October – On wards

260-Consent Agreement

23 Drafted compliance notices

10 08 External conciliators 12

Resolved complaints

Total number of Active Compliants- 7086

• Consent Agreements 1160

• Compliance Notices 191

• Matters referred to conciliation 1631

• Total 2982 (43%)

Status of Complaints

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Challenges /Resource Needs

• CMS- Statistics , records, filing, tracking of complaints Report • Laptops , Desktops • Motor vehicles - Delivery of Complaints , Inspections , consent

Agreement, Compliance Notices • 9 Admitted attorneys -3 per work stream -– Draft Consent Agreements/

compliance notices , exempted service, Requests for advice • Subject Specialists- 5- resolution of Complaints • Call centre Agents -15 • Conciliators – 08 • Recording Machines – Conciliations • Telephones to accommodate teleconferencing for up to 4 people• Printing /FAX and scanners :machines - dedicated for each work

stream • Franking Machine

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• Delays/Backlog

• Litigation

• Unresolved complaints

• Inaccurate reports

• Inability to respond to needs of Consumers Promptly

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Implications

InvestigationsINVESTIGATIONS :Retail & Manufacturing Quarter 2 Published Consumer Product Safety Recall Guideline -18th July 2011. 8 (eight) comments

received Innovative Medicines South Africa (IMSA); Woolworths; NAAMSA; Brandhouse; Nampak; MTN; Consumer Goods Council; Shoprite Checkers)

• Returns and refunds; Price disclosures/ Trade Descriptions• Sales records-lay bye • Inspections –sample inspections on going retail level -Quarter 3 and 4 • Nationwide inspection – Focus ; rural areas (NPA and SAPS – Partnership )• Pro-forma Compliance Notices • Returns and refunds; Price disclosures/ Trade Descriptions- Code of Conduct • Lay by – On going • Disclosure of Grey/ Parallel goods

Investigations INVESTIGATIONS :ICT Sector

Quarter 2 :• Issued 7 Compliance Notices - MTN, Cell C, Vodacom, Telkom fixed & mobile; Top TV, Multi-

Choice• Received roaming agreements from Cell C , MTN and still waiting Vodacom response.• SABC –Terms and Conditions

Quarter 3 and 4:Section 48 –Pricing :Roaming Costs , Cell-phone costs Section 13 - Bundling Of Goods and Services: Section 63 –Transportation & pre-paid Data • SABC Consent Agreement • Written requests for explanation of handset subsidies• Pre-paid Data): S63 of the CPA• Meeting with Gautrain to be rescheduled

Investigations

Medical and Pharmaceuticals

Quarter 2 :Met with:• Medscheme (Fedhealth &Bonitas )• Medicines Control Council • Allied Health Professions Council of SA • Pharmaceutical IndustryInspections :• Two municipal Clinics ,One Public Hospital and a Private Hospital Analysis :• Top four Open and Closed Medical Aid Scheme rules (Non Compliance with the CPA )

Quarter 3 and 4 : Targeted investigation – Vulnerable groups –Rural Areas : Hospices , Aged , Disabled , nation

wide Inspection: Commencing –November 2011 • Limpopo , North West , Mpumalanga and Gauteng

Investigations

EXTERNAL

• Suppliers generally have not aligned business practices and processes with CPA

• Suppliers not familiar with CPA obligations

Investigations

INTERNAL

• Shortage of staff with consumer law competencies (Currently 7 core members)

• Electronic Case management system• Administrative support

• Human Resource Unit

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Staff Complement as at 30 September 2011

NCC approved posts = 131 • Permanent Posts filled = 48• Vacant posts = 83• Contract workers = 41• N.B. Posts on structure cannot be filled due to

budgetary constraints, thus place reliance on contract workers. Full staff complement will cost R 39 million.

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• Special skills required within the organisation– Research

• Economist, Statistician, civil engineering

– Complaints handling• Legal, Property i.e. conveyance and

banking experience– Investigations

• Intelligence, medical doctor

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• Activities To DateStrategy Development

• Structure– Structure is aligned to the NCC strategic objective

• Staffing– Critical positions are filled and others will be considered after

the budget approval• Skills

– Comprehensive annual skills plan to be developed • Systems

– Contract of employment» The contract of employment was developed and distributed

to all permanent employees.» Every employee were give opportunity to read and

understand the contract before signing, any clarity seeking questions were referred to HR.

» Some employees raised questions and those questions were cleared.

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• Activities to date (continuation)• Performance management system

– Performance management Agreements to be developed and all employees to sign their agreements aligned to the Commissioner’s performance agreement.

• The NCC has develop its own HR policies and procedures, namely:– Human Resource Planning– Recruitment and selection– Training and development– Employment equity – Employment assistance programme– Health and safety– Sexual harassment– Leave policy

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Challenges• NEHAWU lodged a disputes with DTI on the

interest of their members within the NCC.• The dispute among others, is with regards to the

transfer agreement signed between the NEHAWU and the DTI

• Contract of employment is among issues raised by the Union.

• They were not willing to clarify their concerns otherwise they lodge a dispute through their Union

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Information and Communication Technologies Unit

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ICT ProjectsPROJECT STATUS COST

ICT MASTER PLAN Terms of Reference completed, ready for 100 000.00

ICT INFRASTRUCTURE – LAN Hundred points completed. 3400 000.00

ICT INFRASTRUCTURE – SERVERS Two servers operating -

ICT INFRASTRUCTURE – SERVER ROOM

Identified and to be completed with final rollout. -

ICT INFRASTRUCTURE – COMPUTERS Fifty computers inherited from the DTI. 1000 000.00

COPIERS & PRINTERS TOR advertised for Leasing, waiting for adjudication. 1500 000.00

MICROSOFT LICENCES TOR completed, ready for advertising ,letter sent to DTI for ‘picky-bagging’,.

800 000.00

ERP SYSTEMS Accupac & VIP, implementation has been scheduled. 500 000.00

CASE MANAGEMENT SYSTEM TOR are completed, will advertise the RFI. 4200 000.00

WEBSITE Launched and managed by the DTi without the involvement of the NCC.

467 000.00

INTRANET Microsoft Sharepoint will be used. -

BACKUP SOFTWARE To be considered on final roll out. 200 000.00

SECURITY SOFTWARES (FIREWALL & ANTIVIRUS)

TOR are developed, softwares installed on trial versions until ratification

200 000.00

MIS To be considered in the third quarter. 1000 000.00

EDMS To be considered in the third quarter. 1000 000.00

TOTAL 15,267,000.0030

Challenges• Computers Management: inherited computers were configured by the DTI.

There are challenges with passwords and security utilities leading to breakdowns and malfunctioning.

• Email System: The Commission lost two weeks of emails. The challenges ranged from domain registration information to routing of emails to new NCC server. Currently old users with mail cannot convert to new system without losing old mail. Less than half of staff have email connectivity. Discussion and letters have been written to the department to assist with conversion of mails but little progress was achieved. The Commission is however registering more domain names

• Website: The Commission learnt that the DTI was in the process of Website Development for the NCC. Letters were written requesting full involvement of the NCC. However, the DTI launched the Website without the NCC involvement. A letter requesting handover was submitted. There has not been any response to all letters. Currently, the challenge is that the NCC has no control whatsoever over the website.

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• Challenges (continuation)• Licenses: Commission requested to use DTI

license agreement & a letter of request was submitted.

• Opt Out Register: The Commission faced challenges on whether to outsource of host its own. After consideration, the Commission concluded that the option of outsourcing to an independent body is best. A letter was submitted to minister requesting funding.

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• Challenges (continuation)

• Adequate Budget.

• Stakeholders Support (i.e. the Dti).

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Finance

Unit

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Transfer of funds

The NCC Corporate bank account is now active with money

Signatories have been selected and application of electronic

transfer system in finalisation stage

The dti transferred R19,7 million into NCC Corporate Bank

account in August 2011

The rest of R13.3 million will be transferred after the dti made

analyses of the NCC spending in the 3rd quarter

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Processing of salaries & payments The dti has been processing all payment on behalf of the NCC

from 01 April 2011 till 30 September 2011

The dti transferred R19,7 million into NCC Corporate Bank

account in September 2011

The rest of R13.3 million will be transferred after the dti made

analyses of the NCC spending in the 3rd quarter

All salaries and service providers are now paid by the NCC

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Historical challenges prior to 30th October 2011

Delays in paying NCC staff

Delays in transfer of money into NCC bank account

Delays in paying NCC service providers

Non control of transactions processed by the dti on behalf of NCC (completeness of transactions)

Completeness information processed for management account purposes

Non access to petty cash. (No money in NCC bank account)

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Current challenges

Analysis of Sweep fund account

The NCC still need financial assistance from the Sweep Account

and to receive the remaining funds from the Budget to pay set up

costs of the NCC

However, the Minister has written to NCC that money will be

transferred soon

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Current challenges

The proposed budget MTEF has been sent to Treasury,

and the dti who were supposed to incorporate it into the

dti consolidated MTEF has not been done so.

A letter has been sent to the Minister and the dti DG

raising the concern about over two weeks and await the

response.

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FINANCE IMPLICATION IF NO BUDGET IS APPROVED

As highlighted in the previous Portfolio Committee meeting, the allocated

budget of R33 million is not enough to enable the NCC to meet its strategic

goals;

The R33 million won’t cover the total staff cost if we have to feel all

vacancies;

Other operational expenditure commitments might not be met;

Other divisions might have to be closed or staff be reduced;

Negative HR environment.

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NEW PREMISES REQUIREMENTS

Local Area Network 500 000

Server Room 500 000

Servers 1 000 000

PC’s, Printers and Copiers 2 500 000

Microsoft Licenses 800 000

Security Softwares. 200 000

ERP Softwares 500 000

Case Management System 4 200 000

Back Up Software 200 000

ICT Strategy 100 000

Website/ Intranet 250 000

Management Information System 1 000 000

EDMS 1 000 000

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TOTAL IDEAL BUDGET Staff cost (per structure) 39 190 085

1 Executives, Section Heads & Directors (17 employees)

14 725 075

2 Legal Advisors & Deputy Directors (23 employees)

7 429 500

3 Coordinators, Officers, Admin Assistants, Agents & Practitioners (90 employees)

12 054 195

4 Incentives 4 981 316 5 Operating cost 16 850 000 6 Business Plan Budget 23 100 000

Capex 18 860 000 ICT Hardware 8 000 000 Computers & Software Licenses 700 000 IT (Case management) 4 400 000 Motor Vehicles X 2 460 000 Office Equipment 800 000 Office Security 1 000 000 Furniture 3 500 000

TOTAL BUDGET R 98 000 085

CURRENT BUDGET ALREADY ALLOCATED TO NCC R 33 000 000

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• THE END

• KE YA LEBOHA

• NGI YA BONGA

• THANKYOU