PORTFOLIO COMMITTEE ON TRADE AND INDUSTRY 19 October 2011

1. PORTFOLIO COMMITTEE ON TRADE AND INDUSTRY 19 October 2011

2. Delegation Ms 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

3. Purpose To give an update on the following issues as raised by the Portfolio Committee in July 2011: • Capacity of the NCC to fulfil its allocated functions, the process to address this and challenges in this regard. • The NCC's plans and progress on its public awareness programmes. • The potential to establish and strengthen consumer protection groups. • Status on complaints and/or allegations received thus far, as well as possible challenges in this regard. • Finance – Late payments of suppliers –budgetary constraints-impact on delivery • IT – NCC website – Finalization • Cooperate Services – Operational plan • New office – location for NCC

4. 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

5. Advocacy Education and Awareness Plan 2011/12

6. 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

7. Workshops

8. Media Engagements Media 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

9. 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.

10. 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.

11. 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

12. Complaints Handling Unit

13. Complaints Categories – 7 086

14. Complaints' handling

15. Status of Complaints Resolved complaints Total number of Active Compliants- 7086 • Consent Agreements 1160 • Compliance Notices191 • Matters referred to conciliation 1631 • Total 2982 (43%)

16. 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 16

17. Implications • Delays/Backlog • Litigation • Unresolved complaints • Inaccurate reports • Inability to respond to needs of Consumers Promptly

18. Investigations INVESTIGATIONS : 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

19. 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

20. Investigations Medical and Pharmaceuticals Quarter 2 : Met with: • Medscheme (Fedhealth &Bonitas ) • Medicines Control Council • Allied Health Professions Council of SA • Pharmaceutical Industry Inspections : • 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

21. Investigations EXTERNAL • Suppliers generally have not aligned business practices and processes with CPA • Suppliers not familiar with CPA obligations

22. Investigations INTERNAL • Shortage of staff with consumer law competencies (Currently 7 core members) • Electronic Case management system • Administrative support

23. Human Resource Unit

24. 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.

25. 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

26. Activities To Date Strategy 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.

27. 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

28. 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

29. Information and Communication Technologies Unit

30. ICT Projects

31. 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.

32. 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.

33. Challenges (continuation) • Adequate Budget. • Stakeholders Support (i.e. the Dti).

34. Finance Unit

35. 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

36. 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

37. 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)

38. 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

39. 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.

40. 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.

43. THE END • KE YA LEBOHA • NGI YA BONGA • THANKYOU