Consumer Protection Act 68 of 2008

1. Consumer Protection Act 68 of 2008 Presentation to the Portfolio Committee on Trade and Industry 14 October 2010

2. Delegation • Ms Zodwa Ntuli: Deputy Director-General, Consumer and Corporate Regulation Division (CCRD) • Ms Nomfundo Maseti: Chief Director, Policy and Legislation • Mr Andisa Potwana: Director, Consumer and Competition Policy and Law

3. Outline of the Presentation • Purpose • Background on Policy Reform • Overview of the Consumer Protection Act (“CPA”) 3.1 Objectives 3.2 Consumer Rights 3.3 Institutional Arrangement 3.4 Functions of the National Consumer Commission 3.5 Role of Provincial Authorities • Establishment of the National Consumer Commission (“NCC”) 4.1 Project Management 4.2 Risk Analysis and Management 4.3 Institutional Comparative Study 4.4 Assessment of State of Readiness of Provincial Authorities 4.5 Planned National Consumer Commission • Status of the Implementation of the Act

4. Purpose To brief the Portfolio Committee on Trade and Industry on the Consumer Protection Act 68 of 2008 and the status of implementation of this law

5. Background on Policy Reform International Legislative Benchmarking Study • Reviewed the laws, models and mechanisms of several jurisdictions including Argentina, Brazil, Chile, India, UK, Finland, Australia, Ghana, Botswana and Canada. Most jurisdictions have one comprehensive law as it provides uniformity and certainty due to clear and upfront rules of conduct. South African National Consumer Survey • Interviewed consumers (72% black, 12% white,12% colored, 39 % rural and 35% metro) to establish the extent to which they are aware of their rights, the types of violations they have experienced and their view of what could be done to improve access to redress. Review of Consumer Protection Measures in South Africa • Reviewed 70 Acts that provide for consumer protection in a range of fields and sectors including safety, insurance, financial services, health, transport, aviation, environment, business practices etc.

6. Findings of the Study • No statute in RSA that contains a clear statement on consumer rights; • Certain aspects of the purchasing cycle are unregulated and are left to common law (contracts, liability) - leaving consumers and businesses (especially small businesses) vulnerable; • Access to redress is limited for consumers, especially low-income earners - industry self-regulatory schemes in the form of codes and ombudsman offices exists but not across sectors; • Most existing laws do not provide for enforcement and redress mechanisms - leaving consumers in the dark on what to do with a problem or at the mercy of the courts

7. Findings of the Study • No substantial review since 1988 when Consumer Affairs (Unfair Business Practices) Act was introduced; • South Africa lagging behind other international jurisdictions; • Global and domestic environment has changed significantly; • Opening up of markets and movement of people, goods and services across borders;

8. Findings of the Study • Growing incidence of scams and unfair practices; • Weak enforcement mechanisms and institutions; • Fragmented regulation across sectors; • Reliance on criminal sanctions (matters reported to police)to protect vulnerable consumers and • Outdated expensive/costly common law regime

9. Overview of the Consumer Protection Act

10. Objectives of the Act • Promote a fair, efficient and transparent market place for consumers and business; • Provide a consistent, predictable and effective regulatory framework that fosters consumer confidence, but also recognizes the developmental imperatives of the South African economy; • Provide access to effective consumer redress for economic citizens; • Promote better customer service in the public and private sector; • Harmonize consumer protection framework with international best practice.

11. Consumer Rights • The new Act adopts a rights based approach with an emphasis on the following consumer rights: (Based on UN Consumer Rights Charter) • Right to Equality in consumer market – prohibits unfair discrimination • Right to Privacy – use of consumer information & “Opt Out” Register • Right to Disclosure and Information – plain and understandable language • Right to Choice – bundling of goods, cancellation of contracts 20 days Notice • Right to Fair and Responsible Marketing – bait, referral negative option • Right to Honest Dealings -fair contract terms, prohibits misleading representation • Right to Fair Value, Good Quality and Safety – strict liability, recall of products • Right to be Heard and Obtain Redress – accessible redress mechanisms

12. Institutional Arrangement • The Act establishes an investigative body, the National Consumer Commission to enforce compliance • The National Consumer Tribunal is established in terms of the National Credit Act to adjudicate on consumer protection complaints – cross referencing in the Consumer Protection Act • Other structures recognised by the Consumer Protection Act for enforcement are the following: • Provincial Consumer Authorities • Civil Society - accreditation of consumer groups to act on behalf of members of the society – this may include Non-governmental Organisations (NGOs) • Statutory Ombudsman • Industry Ombuds accredited in terms of Consumer Protection Act • Ordinary Courts to handle matters relating to unfair contracts

13. Functions of the Commission • The functions of the NCC are as follows: • Investigate and prosecutecomplaints before the National Consumer Tribunal; • Monitor consumer marketand producing trend analysis reports; • Advocacy and legislative reform (with government and sector regulators); • Receive and resolve complaints concerning prohibited conduct under the Act; • Promote consumer protection in organs of state; • increase knowledge of the dynamics of the consumer market and promote public awareness of consumer protection matters through research and public information; • Develop and maintain relations with other regulatory authorities; • Promote of informal dispute resolution; • Accredit and monitor industry codes of conduct and ombud schemes; and • Negotiate undertakings and consent orders.

14. Role of Provincial Authorities A provincial consumer protection authority has jurisdiction within its Province • issue compliance notices in terms of this Act on behalf of the Commission to any person carrying on business exclusively within that province; • facilitate the mediation or conciliation of a dispute arising in terms of this Act between or among persons resident, or carrying on business exclusively within that province; • refer a dispute to the provincial consumer court within that province, if there is one; and • request the Commission to initiate a complaint in respect of any apparent prohibited conduct or offence in terms of this Act arising within that province

15. Establishment of the National Consumer Commission

16. Project Management • A fully functional Steering Committee was established and comprises of Ms Zodwa Ntuli (DDG CCRD), Mr Ebrahim Mohamed (Chief Director: Office of Consumer Protection (OCP) and Ms Busi Ngwenya (Director: Strategy and Special Projects) • A Business Case developed and submitted to National Treasury and to submitted to DPSA for the job evaluation process of Commissioner and Deputy Commissioner positions – completed and approved • Implementation and Risk Management Plan was developed and monitored – budget allocated 2010/11 R24 800, 2011/12 R32 988 , 2012/2013 R41577 • Service Providers appointed to assist with organizational design, change management and human capital, communication and branding/corporate image

17. Risk Analysis and Management

18. Risk Analysis and Management

19. Institutional Comparative Study

20. Institutional Comparative Study

21. State of Readiness of Provinces • Given the concurrent jurisdiction on consumer protection, the dti consulted with all provincial consumer protection authorities to determine their state of readiness for implementation of the CPA. • The consultative process dealt annual budget allocated for consumer protection, rank of official charged with consumer protection, total staff complements, existence of a consumer court/ tribunal, legislation in effect, number of complaints dealt with, and the nature of system used to process complaints • A presentation on the findings of this and appeal for political support on consumer protection will be made to MINMEC on 14 October 2010

22. State of Readiness of Provinces

23. The National Consumer Commission • We plan to create a knowledge institution that: • Is world class and comparable to institutions on same level • Is efficient, effective, innovative and accessible • Has functioning and accessible operating systems • Is easily recognisable by NGOs, consumers, other stakeholders and is accessible • Has verifiable data and working relations with other agencies • Is able to work smarter and optimize available resources • Has credible, respectable and strong leadership • Has excellent relations with provincial structures, traditional and community structures and other regulatory agencies

24. Commissioner Deputy Commissioner Company Secretary Executive Legal Services Executive Corporate Services Executive Enforcement and Investigations Executive Policy, Research and Analysis Executive Education, Compliance & Advocacy The National Consumer Commission

25. Status of the Implementation

26. Status of Implementation of the Act • The Act stipulates two dates for giving effect to its implementation as follows: • Early effective date – one year after signing by the President which was 24 April 2010 – to allow the establishment of the Commission and appointment of staff of the Commission and the Commissioner, development of regulations, application for recognition of industry code of conduct, exemption of other national legislation take effect during this period; General Effective date – all remaining provisions including implementation of consumer rights should take place 18 months after signing by the President - 24th of October 2010.

27. Status of Implementation of the Act • OCP has been handling the functions as of 24 April 2010 for the early implementation provisions • The general implementation date was postponed in terms of Schedule 2 item 3 of the Act which allows Minister to defer the effective date of any provision by six additional months - the Act will now be implemented on 1 April 2010. • Regulations to give effect to the Act are being finalized and will be published for comment by end of October 2010. • Processes for establishment of the National Consumer Commission is on track – process to appoint Deputy Commissioner and the Commissioner have commenced – section 87 of the Act requires consultation with the Portfolio Committee and Minister has initiated that process already

28. Thank you…!