presentation to the parliamentary portfolio committee 27 july 2012

Presentation to the Parliamentary Portfolio Presentation to the Parliamentary Portfolio CommitteeCommittee

27 July 201227 July 2012

Diane Terblanche

Chairperson

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Role and FunctionRole and Function

Role

•Provide access to redress to consumers through findings of prohibited conduct in terms of the NCA and CPA•Resolve disputes between parties

Function•Adjudicate on applications and referrals made to NCT in terms of the NCA and the CPA

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Approach to MandateApproach to Mandate

• General approach of Tribunal is not to just rubberstamp consent orders

and settlement agreements. The Tribunal will adjudicate on the matter

to ensure that the order given by the Tribunal is lawful and complies

with the requirements of the NCA and the CPA

• Section 142(1) of the NCA governs the Tribunal hearing procedure -

must conduct its hearings in public, in an inquisitorial manner, as

expeditiously as possible, as informally as possible and in accordance

with the principles of natural justice. Links back to SA Constitution and

PAJA

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Adjudication

•Conducts hearings (section 142 of NCA applies)•Confirms consent orders / debt re-arrangement agreements•Reviews compliance notices•De-registrations of registrants•Imposes administrative fines•Issues orders for interim relief •Issues costs orders – limited instances

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Follows on regulatory actions of Regulators / Challenges by regulated persons / entities

•Enforcement action against registrants (NCA only) •Compliance notices •Non referrals•Referrals •Settlements / consent orders

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Regulatory actions by Regulators

•Refer / non–refer prohibited conduct

•Enter into settlement agreements

•Issue compliance notices

•Refer for prosecution to NPA

Each with specific consequence to regulatory objective

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CPA Workflow:

•Commission received a complaint or initiate its own investigation;•Section 73:

• 73(1) Commission conducts and concludes an investigation into a complaint. On conclusion of the investigation, the Commission may:

•Issue a notice of non – referral (if Commission believes complaint has no merits or not prohibited conduct); or•Refer matter to NPA (if Commission believed that person has committed an offence); or•If the Commission believes that person has engaged in prohibited conduct -

• Refer to equality court;• Propose a consent order ito sect 74;• Make a referral to the Tribunal ito sect 73(2); or• Issue a compliance notice ito sect 100.

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CPA Workflow:

•Compliance notice would be appropriate where a person contravenes the CPA, and contravention may be harmful to economy in general and not harmful for a specific individual.

• Compliance notice meant to stop non-compliance with the CPA and to direct future conduct.

• Corrective rather than retribution.• Any penalty levied will go the fiscus and not to either the Commission or the Tribunal or

the Complainant.

•Consent order – Middle Route• If person admits prohibited conduct and willing to cooperate and can agree with the

Commission on proposed terms of an appropriate order, this can be made a consent order of the Tribunal. Can include an award of damages.

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• Referral of Prohibited conduct to Tribunal – Strongest remedy for a consumer.• If the Tribunal makes a finding of prohibited conduct based on a referral, a

consumer can obtain a certificate of prohibited conduct from the Chairperson of the Tribunal. With this certificate, a consumer can apply to a High Court for a damages award

• The election of the Commission on conclusion of the investigation is of key importance as it determines whether a consumer will have a remedy for damages suffered or not, alternatively whether the consumer will be entitled to interim relief.• Nayyara Distribution v Earlywork 266 - In this matter the Commission elected

to issue a Compliance notice instead of referring the matter to the Tribunal for a determination of prohibited conduct, which resulted in the consumer being unable to obtain interim relief and in addition, the consumer could not get a certificate of prohibited conduct in order to claim damages suffered.

Tribunal CaseloadTribunal Caseload

• Consent order & Non-consent order applications filed per financial year

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2011/12 2010/112009/1

0

2008/0

92007/08

Consent order applications 2 143 1358 454 4 3

Complete 1 711 935 204 1 1

Incomplete 432 423 250 3 1

Non-consent order

applications

62 24 34 22 9

Complete 51 20 21 10 3

Incomplete 11 4 13 12 6

Total applications received 2 205 1 382 488 26 11


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• Tribunal caseload increased with 60% from the previous financial year;

• Increase in number of non-consent order applications was 158%.

• Above increase can be directly contributed to the implementation of the CPA.

• 55% of non-consent order applications filed during last financial year were CPA-applications (review of compliance notices).

NCA ApplicationsNCA Applications

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During the last financial year, the NCT adjudicated on 11

types of applications ito the National Credit Act, 2005

•1 out of 11 referred by Regulator (de-registrations)

•10 out of eleven by private parties

•0 prohibited conduct referrals – 49 PC in NCA


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During the last financial year, the NCT adjudicated on the following

applications ito the National Credit Act, 2005

Section 57(1) - Cancellation of registration (Main issue)

Section 114(1) - To compel the production of a statement

Section 137(3) - Application to Tribunal upon failure of ADR

Section 63(5) - Application to review a decision regarding the

languages used in credit documentation

Section 165 - Variation of order

Section 138(1) - Application for a Consent order

Section 56(1) - Setting aside a notice issued by Regulator

Section 128 - Review sale of goods

Section 141 - Non-referral of a Complaint

Section 149 - Interim relief


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Debt re-arrangements as Consent order applications by DCs iro

• more than 7 000 consumer credit agreements; • with a combined value of more than R200 million, were dealt with by the Tribunal during the last

financial year.

The consent orders granted in these applications resulted in consumers being in a position to retain both immovable and movable property whilst servicing their credit agreements in a responsible manner.

CPA MattersCPA Matters

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• To date, only 2 types of CPA applications received, • review of compliance notices ito Section 101(1) of the CPA ;and• applications for interim relief ito Section 114 of the CPA.

• Aproximately 99 intances of prohibited conduct under CPA

• No referrals of prohibit conduct cases received.

• The legal* issues in CPA matters are very complex and the records filed by the parties are voluminous.

APPLICABLE LEGAL PRINCIPLES / NCT APPLICABLE LEGAL PRINCIPLES / NCT

APPROACH TO ADJUDICATION APPROACH TO ADJUDICATION

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• When the Tribunal adjudicates – consider 2 broad aspects:• Jurisdictional issues

Procedural requirements; Jurisdictional facts and prerequisites Technical requirements – form and content

• Substantive issues Merits

• Jurisdictional Fact = pre-condition which must exist prior to the exercise of administrative power (known as a substantive

jurisdictional fact) or a procedure that must be followed when exercising the power (known as a procedural jurisdictional fact)


APPROACH TO ADJUDICATIONAPPROACH TO ADJUDICATION

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• Tribunal approach is to first consider jurisdictional issues, prior to considering substantive issues.

Unnecessary to look at merits if process not in order;

Avoid a lengthy hearing if not necessary;

Jurisdictional issues often deals with procedural fairness, i.e. just administrative action by a public entity.



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Exercising Public Power

•NCC, NCR & Tribunal are all public entities who must comply with the Constitution and the doctrine of legality (part of rule of law)

•Rule of law – to act within powers & decisions/actions should be authorised by law.

•Public bodies must function within the constraints of the law



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• Administrators must exercise their authority according to the law and cannot exercise it arbitrarily. They cannot be a law unto themselves

Goldstone J in Dawnlaan Beleggings (Edms) Bpk v Johannesburg Stock Exchange 1983 (3) SA 344 (W)

• Fedsure Life Assurance Ltd v Greater Johannesburg Transitional Metropolitan Council 1999 (1) SA 374 (CC) Chaskalson P stated that it is “a fundamental principle of the rule of law, recognized widely that the exercise of public power is only legitimate where lawful” and that “it is central to the conception of our constitutional order” that public bodies are “constrained by the principle that they may exercise no power and perform no function beyond that conferred on them by law”

• The Constitution proclaims the existence of a State that is founded on the rule of law. Under such a regime legitimate State authority exists only within the confines of the law, as it is embodied in the Constitution that created it, and the purported exercise of such authority other than in accordance with the law is a nullity

Nugent J in S v Mabena 2007 (1) SACR 482 (SCA).



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Compliance Notices• Section 100(3) – Form and contents of a compliance notice:

•Person to whom notice applies;•Provisions of CPA that has not been complied with;•Details and nature and extent of non compliance;•Any steps required to be taken and period within which to take steps;•Penalty that may be imposed (by the Tribunal) if steps are not taken;

•MTN v NCC – Person to whom notice is addressed•Vodacom v NCC – Person to whom addressed, details and nature of non compliance•City of Johanncesburg v NCC- Form of compliance notice;

• Section 100(4) – Compliance Notice remains valid until set aside by Tribunal or Court on review of Tribunal decision until Commission issues a compliance certificate.

•If impossible to comply with compliance notice or if notice is fatally flawed (content or process) thereby rendering notice defective, Commission cannot withdraw the notice, CPA does not allow for this, only Tribunal can set aside.



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Compliance Notice Process:

• PAJA is applicable because issuing of a compliance notice constitutes administrative action.

• Definition of administrative action ito Sect 1 of PAJA:Any decision taken or failure to take a decision by an organ of state when exercising a public power ito the Constitution or any legislation which adversely affects the rights of any person and which has a direct, external legal effect.

• Tribunal accordingly reviews a compliance based on CPA section 100 requirements as well as requirements of section 6(2) of PAJA which indicates that a court or tribunal has specific review powers when reviewing administrative action.

•Vodacom v NCC – Tribunal found compliance notice issued as a result of Vodacom refusing to sign a consent order. This refusal does not constitute prohibited conduct and unlawful for Commission to use threat of compliance notice to force a party to agree to terms it would not usually agree to.

Matters adjudicatedMatters adjudicated

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• Out of 58 non-consent order applications adjudicated on to date, only 1 decision (representing 1.7%) was overturned on review.

• Currently the Tribunal has established a roll schedule of at least two matters being heard in a week and interim relief matters being heard as soon as possible.

• Currently, 42 non-consent order matters filed with the Tribunal must still be adjudicated on.

• Of these, 3 matters will be adjudicated on during the first week of August 2012;

• 19 matters – hearing dates are being arranged;• Remainder – Either incomplete, pleadings must still

close or no further papers filed.

Matters adjudicatedMatters adjudicated

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Matters adjudicated on per financial year:

•Some completed matters withdrawn or settled by the parties and in other matters no further papers filed by the parties to take the matters further.

2007/08 5

2008/09 6

2009/10 19

2010/11 9

2011/12 19

Appeals and ReviewAppeals and Review

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No NCT CASE NUMBER APPEAL PARTICULARS OUTCOME OF THE MATTER

1 SAFPS VS NCR NCT168/2009/54(1)(T)

National Credit Regulator vs. Southern African Fraud Prevention Service Ltd 58190/2010 (North Gauteng High Court, Pretoria)

The ruling of the Tribunal was overturned on review.

2 NCR vs. Bornman and others NCT/656/2010/57(1)(P)

Christopher Bornman and others vs. NCR A6/2011(North Gauteng High Court, Pretoria)

Appeal dismissed

3 NCR vs. Petrus Martinus Ferreira NCT/166/2008/57(1)(P)

PM Ferreira v NCR51467/2010(North Gauteng High Court, Pretoria)

Review dismissed

4 Barko Financial Services (Pty) Ltd vs. NCR NCT/743/2010/56(1)(P)

Barko Financial Services (Pty) Ltd vs. NCR and NCT A499/2011(North Gauteng High Court, Pretoria)

Appeal date allocated

– 20 March 2013

OVERTURNED ON REVIEWOVERTURNED ON REVIEW

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National Credit Regulator v National Consumer Tribunal, Southern African Fraud Prevention Services, Case No 58190/2010

Date Heard: 2011-05-26Court: North Gauteng High CourtJudgment delivered: Legodi J

National Credit Regulator v National Consumer National Credit Regulator v National Consumer Tribunal, Southern African Fraud Prevention Tribunal, Southern African Fraud Prevention

Services, Case No 58190/2010Services, Case No 58190/2010

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FACTS

•On 19 February 2010 the Tribunal granted an order in terms of which a notice of the National Credit Regulator requiring SAFPS to register or cease its present activities was set aside and cancelled in terms Sect 54(4)(a) and 56(2)

•Review of a Compliance Notice – required SAFPS to register as a credit bureau. The Tribunal found that SAFPS did not have to register as a credit bureau ito Sect 43 of the NCA as required by the NCA in its compliance notice.

•The Tribunal found that SAFPS did not carry on business for payment as it was a section 21 company and not a company with a aim for profit.

National Credit Regulator v National Consumer National Credit Regulator v National Consumer

Tribunal, Southern African Fraud Prevention Tribunal, Southern African Fraud Prevention


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APPLICABLE SECTIONS OF THE NCA

•Sect 43 – Registration of a credit bureau

•Sect 54 – restricted activities by unregistered parties

•Sect 56(2) – Tribunal may review compliance notices issued ito sect 54 and sect 55

•Sect 70 – Credit Bureau Information

APPLICABLE SECTIONS OF PAJA

Sect 6(1) read with subsection 2(d)

National Credit Regulator v National Consumer National Credit Regulator v National Consumer

Tribunal, Southern African Fraud Prevention Tribunal, Southern African Fraud Prevention


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JUDGMENT

•Court found that the SAFPS engages with its members for payment in the form of membership fees which it utilises to sustain the services it renders to its members

•“Engages for payment” should have been given simple literal meaning because that is what the legislature meant it to be and means to participate or become involved for payment.

•The Court found in general that the Tribunal erred in interpretation of the relevant sections of the NCA and that this error was a material error of law.

•The Court found that the activities carried on by SAFPS are indeed in contravention of Section 43 of the NCA and subsequently set the NCT’s decision aside. SAFPS was further directed to lodge an application for registration as a credit bureau with the NCR within 21 days of the judgment.

GeneralGeneral

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• In order to increase its accessibility, the Tribunal hears cases away from its offices

• Applications guidelines available in 11 languages

• Tribunal decisions set precedents on interpretation of various sections of the NCA and the CPA.

• Decisions of the Tribunal are available free of charge on international database – SAFLII managed by the Constitutional Court Trust

AdjudicationAdjudication

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Contact DetailsContact Details

Office Hours: Monday to Friday, excluding public holidays, from 09:00 to 16:00.

Postal Address: Private Bag X 110 CENTURION 0046

Physical Address: The National Consumer Tribunal Ground Floor, Building B, 272 West Avenue Lakefield Office Park

Centurion, Pretoria Telephone: (012) 663 5615.

Facsimile: (012) 663 5693. E-mail: [email protected]

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presentation to the parliamentary portfolio committee 27 july 2012

Documents

referral of prohibited

findings of prohibited

finding of prohibited

tribunal ito sect

consent order ito sect

compliance notice ito

conduct orrefer matter

tribunal strongest remedy