PROGRESS REPORT ON THE CONSUMER PROGRESS REPORT ON THE CONSUMER POLICY FRAMEWORKPOLICY FRAMEWORK

PROGRESS REPORT ON THE CONSUMER PROGRESS REPORT ON THE CONSUMER POLICY FRAMEWORKPOLICY FRAMEWORK

Presentation to the Portfolio Committee on Trade and Industry

22 June 2005

Magauta Mphahlele

PURPOSE OF THE PRESENTATION PURPOSE OF THE PRESENTATION

To outline the steps followed in the drafting of and consultation on the consumer policy framework;

To provide an overview of the policy and the response to the policy proposals by various stakeholders; and

To outline the way forward with regards to revising the policy, drafting and consulting on the Bill

Steps in the policy making process

Research conducted in the various areas of consumer protection Draft policy drafted Provincial working group formed to review the policy International and local experts consulted Focus group workshops held with various stakeholders (Industry

Associations, Sector Regulators, government departments) Cabinet approval sought for the dti to engage in a broad consultative

process Presentation to Portfolio Committee Policy Gazetted Policy tabled at NEDLAC and task team formed Public consultation workshops conducted in all the provinces Comments from various stakeholders received and reviewed Impact assessment of the Policy conducted

Research initiatives to identify the Problem:

International Legislative Benchmarking StudyReviewed the scope of consumer law in various countries

including Argentina, Brazil, Chile, India, the UK, Finland and Canada)

South African National Consumer SurveyEstablished the extent to which consumers are aware of their rights, the types of violations and consumer’s view of what could be done to

improve access to redress

Review of Consumer Protection Measures in South AfricaReviewed current legislative and other mechanisms that protect

consumers at National, Provincial, Local and Industry level

Case statistics from complaints resolution and investigationsTrend analysis of cases based on number,type and sector as dealt with

at National and Provincial level

Background to the Policy: The Need For Reform

Background to the Policy: The Need For Reform

Legislative Framework very fragmented and outdated, does not cover new market developments– the dti on its own

administers up to 23 pieces of legislation that regulate various aspects of consumer protection. Various departments (health, Treasury, Transport) also responsible for consumer protection

There is uneven regulation, with heavy regulation in some industries and reliance on self regulation in some areas.

Consumer Rights and Abuses There is no statute that contains a clear statement on consumer rights. There is widespread

abuse in the areas of advertising, contract terms, guarantees, selling methods (inertia,direct,pyramid,),product standards and liability, abuse of personal information, product disclosure etc.

Certain aspects of the purchasing cycle are not regulated, leaving consumers and businesses (especially small businesses) vulnerable and subject to widespread abuse.

Access to Basic Goods and Services and Redress Access to redress and essential products and services is limited for low income consumers Enforcement capacity is limited and uncoordinated Sanctions more criminal rather than administrative, limits redress Rights within the public sector not enforceable due to voluntary public service Batho Pele

principles

Background to the Policy: Research Findings

Background to the Policy: Research Findings

Overview of Policy ProposalsOverview of Policy ProposalsOBJECTIVE

Promote a fair and Efficient market place for

consumers

Comprehensive consumer law thatRegulates the whole purchasing

Cycle and provides for basic rights

MEASURE

Provide a consistent, predictable,and effective regulatory framework

Provide effective access to redressFor consumers and small businesses

Establish Consumer CommissionThat will be responsible for Compliance and enforcement

Recognise and support the role ofActivist and confident consumers

Promote customer responsivenessIn the private and public sector

Harmonise consumer protection Laws in South Africa

Alternative dispute resolution, Decriminalise sanctions, access,

Enforce properly

Funding and Capacity Building forNGOs

Set mandatory standards for service delivery

Review, repeal and harmonise various Acts

Summary of CommentsSummary of CommentsInstitution CommentLabor (NEDLAC) Labor was concerned with the emphasis on driving

competitiveness as it is their view that the developmental stage at which South Africa is warrants an emphasis on the right of access to basic goods and services

Business (NEDLAC)

Business supported most of the objectives but stressed that it was important to ensure freedom of commercial speech and to minimise compliance burdens on small business

National Consumer Forum

Law Society Wanted clarity on how the new law would interact with professional bodies

Eskom Questioned the role of current sector regulators in the telecommunications industry

SANCU Questioned the establishment of the National Credit Regulator as they saw it as an expensive but did not provide alternative

The following can be deduced from the comments:

• There is general support for the need to undertake consumer law reform in South Africa• A rights based approach to the law is supported • The need to coordinate and strengthen the current enforcement approach and capacity

With regards to the regulatory options to adress the identified problems the following could be deduced• There is a difference of opinion between business,Consumer NGOs and labor, with regards to the

regulatory. From the comments three regulatory options are argued for• A hybryd of self regulation and governemnt intervention• Asess capacity of current institutions and build capacity of NGOs to reach grass roots• Maintaining current status quo but undertaking intensive consumer education and improving

enforcement

Analysis of CommentsAnalysis of Comments

• Will repeal:– National Consumer Affairs (Unfair

Business Practices) Act;– Sale and Service Matters’ Act;– Alienation of Land Act;– Trade Practices Act

• Will result in amendments to sector laws

Overarching new consumer lawOverarching new consumer law

• Practices to be Prohibited:– Misleading advertising and selling practices;

• bait advertising,referral selling,pyramid selling, third line forcing, inertia selling etc

– Unfair terms in consumer contracts;• Exclusion of liability, binding the consumer when the

co.is at fault, restriction of consumer rights & remedies, unilateral variation of terms etc

– Abuse of private and personal information;– Product safety and liability;

• Explicit recognition of a right to product safety in law;• Overarching role of SABS;• Liability on manufacturers & other parties

Establishing consumer rightsEstablishing consumer rights

• Competitive issues & minimum mandatory requirements:– Product quality;

• Give consumers assurance that what is provided is fair and of an acceptable standard

– Guarantees, Warranties and Aftercare;• Where offered, must be honored

– Disclosure and labeling;• Product labeling and description of products

&services;• Price transparency;• Country of origin;• Terms and conditions pertaining to transaction

– Rights in relation to essential services

Establishing consumer rightsEstablishing consumer rights

• Concurrent provincial laws– No need for immediate change;– Eventually harminisation with national framework;– Policy level: MINMEC– Enforcement: national laws, regional laws and

international mechanisms• Concurrency with other regulators

– Extend consumer protection to sectors;– Establish coordinating mechanisms at enforcement

level

Concurrency with provincial & Sector law

Concurrency with provincial & Sector law

Proposed regulatory framework• New national regulator and tribunal

– Champion for consumer protection – proactive identification and prosecution of consumer abuses and contraventions;

– deal primarily with national businesses, systemic problems and cross border issues;

– cross-cutting responsibility for education;– provides single entry point for consumers

(referrals and monitoring)

Improving access to redressImproving access to redress

• Provincial consumer affairs & courts:

– deal primarily with individual complaints against local/provincial businesses

• Sector regulators– Deal with consumer complaints and education in

sectors

• SABS– Must deal with product safety issues;

harmonization and co-ordination

Improving access to redressImproving access to redress

Other Mechanisms• Service NGOs, target rural areas

– Legal advice, counseling and mediation – MPCCc provincially– Government Supported Services (accreditation and

monitoring) • Alternative Dispute Resolution mechanisms:

– Business complaints handling;– Statutory mechanisms;(ombuds, small claims court)– Industry voluntary mechanisms;

Improving access to redressImproving access to redress

• Vision for consumer movement:– Service NGOs

• Product testing, product alerts, information dissemination etc.

– Advocacy NGOs• Research;• Market monitoring;• Policy inputs;• Representation [class action]

• Government (and business) support– Funding & capacity-building programme– Specific powers in law – Recognition

Developing the consumer voiceDeveloping the consumer voice

Private sector (voluntary measures)• Corporate citizenship;• Customer responsiveness;• Effective complaints handling systems;

• Government support:– Standards (largely voluntary)– Current incentives– International and local best practices (guidelines, practice notes)– Recognition (business awards)

Public sector• Extend Batho Pele to local government (mandatory)• Extend consumer protection to utility regulators;• Foster coordination with Chapter 09 Institutions• Equivalent application of consumer law in the public sector

Promoting service excellencePromoting service excellence

THANK YOUTHANK YOUQUESTIONS & CLARIFICATIONSQUESTIONS & CLARIFICATIONS

www.thedti.gov.zacustomer contact centre 0861 843 customer contact centre 0861 843

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THANK YOUTHANK YOUQUESTIONS & CLARIFICATIONSQUESTIONS & CLARIFICATIONS

www.thedti.gov.zacustomer contact centre 0861 843 customer contact centre 0861 843

384384