CONSUMER POLICY & LAW REFORMS

SUMMARY OF PUBLIC COMMENTS

NOVEMBER 2004

MAKING MARKETS WORK FOR CONSUMERS

ESTABLISHING CONSUMER RIGHTS

IMPROVING ACCESS TO REDRESS

DEVELOPING THE CONSUMER VOICE

PROMOTING SERVICE EXCELLENCE

Fair Trade:

The scope of the policy document appears to be more in favour of goods. Consumers spend vasts amounts of money procuring services. The different professions and their associations must fall within the ambit of the future law. The policy document is silent on this.

Misleading marketing and selling practices: Common law provides that the manufacturer is responsible, protection should be extended to cover retailers.

 

Hawkers/ informal business: The policy document does not cater for the informal sector and yet a large section of the population purchases goods and services from unregistered businesses.

Products sold by informal traders do not subscribe to SABS standards, how will product safety in this area be enforced/regulated?

Definition of a consumer: Concerns raised related to the scope of the future consumer law. Will the future law for example enable SMEs to also lodge complaints against "dishonest consumers" [consumers giving incorrect information or refusing to honour their payment obligations].

The word "consumer" needs to be clearly defined.

Consumer compliance:

Promoting service excellence through gearing government incentives to accommodate customer responsiveness and social responsibility programes is a good idea. The dti may enhance this by introducing a concept/ checklist of " Consumer compliance" in the same way that it has done with "BEE compliance"

 

The dti must consider extending redress to SMEs as well, this must not be limited purely to unfair contract terms.

Contract terms:

The policy document must extend to verbal [telephone] contracts.

Even though, contracts affects consumers in one way or the other, contract law regulation falls outside the scope of consumer law and thus the Green Paper. The Department of Justice and the SA Law Commission must be allowed to proceed with a revision of contract law.

 

Cost of establishing new institutions:

How much will it cost the taxpayer to establish the envisaged institutions? Parliament also raised a concern regarding the proliferation of institutions.

Consumer education:

It is consumer education that is lacking more than the lack of awareness regarding rights. Consumers have unreasonable expectations because they do not understand contract law, warranties, guarantees, waiver of rights and fraudulent schemes.

Government is urged to support the development of NGOs, particularly in rural areas.

Consumer Education must be regarded as a right in law.

Application in the public sector:

It is laudable that government wishes to impose the same standards of improved service levels in the public sector.

Access to basics services depends on whether you can afford to pay, if you can’t no services are rendered. Services are cut off even if the error is with billing. Government never able to explain how billing works. Batho Pele is insufficient , it is merely guidelines there is no Consequence- Penalties.

Batho Pele, must be a corner stone in the public sector.

 

Responsibilities of Consumers:

The policy document is silent on the responsibilities of consumers, there must be a balance.

The Green Paper must clearly state the responsibility of consumers to act in a reasonable manner, obtain all relevant information before entering into a transaction.

Imported goods: Repeatedly a concern was raised regarding the extent to which the future law will regulate imported products.

Consumer Agency & Tribunal: Will the future agency collaborate with provinces? In view of the fact that the new Consumer law may come into effect at a time when some provinces still have capacity limitations and may not be able to cope with the new demand. Will provinces be able to request national government to investigate a matter that falls only within provincial jurisdiction? How can this be entertained in the law without provinces being seen to be abandoning their constitutional responsibilities.

Physical access to institutions of redress is paramount

Funding for NGOS:

Beware of Consumer Champions, they must remember who they represent. Do no create a class of elitist and intellectuals who have different values and priorities.

Government must contribute towards building a sustainable consumer movement by firstly providing direct financial support as stated in the Green Paper. Secondly, by procuring services such as research capacity from NGOs.

Government must entertain submissions from NGOs regarding their capacity requirements and must not anticipate their needs.

 

Corporate Citizenship:

Must be considered with the Triple Bottom Line reporting in mind.

Stakeholder representation may pose a conflict of interests problem.

Abuse of power:

Consumer law has potential for abuse of power by authorities, this must be guarded against in drafting the new law.

Comprehensive law vs. Self regulation

The one size fits all approach will not work.

There is a need to recognize industries that are heavily regulated by sector laws. Sector regulated industries must be excluded from the application of the future consumer law.

Self-regulation allows each market to tailor its regulatory requirements in terms of the needs in that sector. In most circumstances sector regulation provides for quality and retail prices.

 

Cross-border enforcement:

This will be duplicated by authories such as the Telecommunications Regulatory Authority of Sourthern Africa which has already adopted consumer protection guidelines for SADC.

Scope of the policy too limited:

The policy must cover exploitation and abuse such as child labour, which is rife in rural areas and farming communities.

Scope of the regulatory institutions too broad:

The mandate of the proposed Consumer Commission appears too broad, more consideration needs to be taken regarding how these various tasks can be addressed by existing bodies.

Effect on SMEs & BBE firms:

If this policy is to applied strictly SMEs and BEEs will suffer.

Markets working for consumers:

An appropriate and consumer friendly environment already exist, it is rather the lack of institutional capacity as opposed to the absence of a comprehensive consumer law that hampers the achievement of objectives stated in the consumer policy.

The Green Paper speaks of sustainability, sustanabilty must include financial and operational sustainiablity which will not be realized if industries are going to be subjected to another layer of regulation.

Forcing consumer benefits through heavy handed-consumer regulation will not contribute towards the efficient functioning of markets.

The need for a comprehensive body of consumer law is supported by the marketing industry. However, this body of law must also strengthen self- regulation which currently takes place through the Code of Advertising Practice and subscription to the code of the International Chamber of Commerce. These codes regulate areas such as responsible food & beverage communication, sales promotion to children and young people, environmental marketing etc.

The perceived weakness "lack of compliance" of self regulation can be strengthened by the future consumer law itself. The law must ensure that self-regulation is utilized. It is necessary to retain the advantages of self-regulation namely, speed, ease of resolution & industry buy-in.

Timing:

Business must be given sufficient transitory time to ensure that they will comply with the future legislation.

Administered Prices:

Let the future law and policy cover administered prices as well. There are loopholes in the laws governing this area. Businesses always find a way of inflating the retail price if overall price is administered.

 

Effectiveness or In effectiveness of current consumer laws:

The Green Paper suggests that previous attempts by government to regulate consumer protection has failed, but the document itself does not clearly outline the current regulatory environment and its flaws.

Consumer protection bodies themselves need to be properly assessed, so that we understand the factors that have attributed to inefficiency or failure.

 

Smart Cards:

Why are you not prohibiting "copy cards". They are used to store information that was skimmed from say a debit or credit card, usually for criminal purposes. Consumers are not protected against card fraud

Concurrent jurisdiction:

What will be the jurisdiction of existing provincial consumer courts? For purposes of promoting access to administrative justice, a business must be able to seek an appeal or review from either through the National Consumer Tribunal or through the civil courts.

Overlaps in jurisdiction will lead to forum shopping and confusion amongst consumers.

Education for SMEs:

Government’s education campaigns must also target small businesses in order to enhance competitiveness and ensure that the SME sector becomes a sustainable employment sector.

Build a Customer Centred business culture.

 

Bureacratic build-up:

Government through the Green Paper has suggested the establishment of new institutions without clearly articulating what will happen to existing structures.

"Members of parliament have warned the dti against setting up an expensive bureaucracy, the National Consumer Forum, is wholly in support of this sentiment".

Government must focus on building grass-roots orgnanisations draw in civil society and non-governmental organisations to ensure sustainable community out reach in terms of education.

 

 

Small Claims Courts:

Small claims courts are underutilized by government, they must be brought into the redress system for consumers inspite of their limitations [transactions worth R3000 and below].

   
   

Damages: The future Consumer Law must enable consumers to claim damages, especially if the consumer harm resulted from negligence or is a repeat offense by the same company. Experiences cited: A razor blade found in a bottle of Lemon Twist.

   
   

Industry Codes & Voluntary Associations: If government does not specifically recognize these in law, the objectives of government to make redress accessible without increasing the cost of obtaining it would be self- defeating, because without such recognition consumers will simply not use these

   
   

Consistency:

The Green paper claims to seek to eliminate inconsistencies and duplications. How will this be done as there are many consumer protection measures in other statutes. Will the national law prevail over these?

The draft Consumer Credit Bill deals with many of the issues raised in the Green Paper. Why the duplication?

   
   

Consumer Helpline:

Must be toll-free to enable access by those who need it.

How are you going to link this to provinces and other regulators. Practically, how is it going to work.

   
   

Regulators Forum:

Some bodies need not be duplicated, such as the Regulators Forum.

Government must however consider a Consumer Policy Forum, which will enable government to interact with consumers & consumer organisations on policy issues.

   
   

Consumer Courts in rural areas:

There are no courts in rural areas and redress is non-existent. The types of mechanisms suggested for rural areas must be tailor made to address the needs of poor people e.g. limited education, long distances to be traveled, no voluntary mechanisms must be suggested for rural communities.