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Consumer Protection Bill gets its first airing

June 1, 2009

Portfolio Committee on Trade and Industry

Whilst calling for public comment on the long-awaited Consumer Protection Bill, the Department of Trade and Industry’s (DTI’s) director Astrid Ludin and project manager Magauta Mpahahele, took time off in Cape Town to present this massive piece of consumer affairs legislation to Parliament in the form of an initial briefing. This was a good idea for a number of reasons.

Whilst the document itself is lengthy, it is also not a finalised draft. Public comment is expected to be intense. So it should be, says the DTI. They told Parliament that they see such input as a partner in the drafting process. The public sector has until late in May 2006 to comment.

Then Ludin expects it will be at least three to four months before Parliaments gets to see the final document. Portfolio chair Ben Martins has already announced that there will be parliamentary hearings as well.

The reason why it’s a good thing that Parliament gets to see the draft now is that at this early stage the DTI can get rid of some of the simple, easy-to- answer questions and not clog up the subsequent debate when serious issues have to be discussed later against time restraints. Quite clearly, the DTI have done a lot of homework.

Ben Turok, MP, said after the DTI’s exhaustive presentation that, without a doubt, it was necessary to clean up South Africa’s consumer environment. He warned the DTI all the same to take things very slowly and go step by step, listening to everybody. He asked whether perhaps “some of the high sounding objectives and idealistic concepts were not above the average man in the street” who was really just after value for money, he said, and some sort of protection against thieves.

There is no doubt that the complex draft is as wide-ranging as it is ambitious, drawing in over ten pieces of existing legislation into a consumer matrix that is intended to place a new national consumer regulator and their sub-offices as police officers in the consumer jungle.

The ANC and the DTI have been in a dilemma over the need for such legislation for some time. Since the application of much of the DTI’s new laws, such as the new Credit Act, the department has been heavily reliant upon the co-operation of community groups and institutions, especially in local environments. Back in 1994 the thought was to ignore all NGOs and bring delivery to the people with an ANC and government ticket. Things are changing, however.

As others had known, community groups – whether they have a religious, cultural or social welfare background, are essential to the delivery process – with or without any political trademark attached. The DTI has recognised this and intend to register and acknowledge NGOs in terms of this new bill, particularly consumer affairs groups, and let them act as representatives of consumer affairs in their local regions, even making judgements.

All the same, consumer groups really don’t like to be overtly funded by the state. Their credibility amongst consumers would be severely constrained if it were thought that they were being paid by government. So ways have to be found to “empower” these agencies, says Ludin, if the proposed National Consumer Council and its equally important tribunal structures are to be rolled out across the country. The DTI will also have to start a major media exercise to “educate” the public on their consumer rights, said Ludin.

Over the next month the bill itself will go under much scrutiny and there will be no doubt much debate over a number of controversial issues – such as 20-day cancellation “cooling off periods” for agreements; 5-day return periods for products; rulings on warranties and guarantees; the rubbishing of “let-out” liability scare clauses; and a number of other proposed regulations that seem to fly in the face of common law cloaked in citizen’s consumer constitutional rights.

Nevertheless, says the DTI, the bill on the definition of consumer rights draws as author upon the United Nations model on consumer affairs. The Consumer Protection Bill is no doubt an ambitious document and cracks down hard on unfair practices, the domain of one of the current laws the new bill replaces.

To quote Les Labuschagne (MP,DA): “We seem to be moving very fast from the era of caveat emptor to the world of caveat vendor.” But, as he observed, there is no doubt that the South African consumer needs such law. Like Turok across the floor, he expressed caution, but Labuschagne quoted personally the impunities he had suffered at the hands of the SAA with overbooked air flights and the inadequacies of the Voyager credit system.

All MPs quoted cases of pyramid selling, negative option marketing, telephone calls at home late at night from unknown sales companies and examples of contracts, agreements and advertising offers that were both illegal and legion. “A clean up is certainly called for”, observed chair Ben Martins.

Ludin of the DTI observed in her summing up: “We need something in place that South African case law can build upon. We cannot just leave things as they are. What’s more, we have taken overseas precedent and tried to adapt things for South Africa. We can only try and at the same time try and keep down the amount of regulation that comes with consumer protection.”

She said she saw the challenges facing the DTI as many, detailing a number of areas of concern, such as how to deal with the many injustices to small businesses and informal business as consumers in the face of big business; how the duplication between the envisaged sector consumer regulators would lock-in with the national regulator body and what would the cost be to national treasury for the campaigns that the DTI had for business compliance and public education.

The DTI plans that such legislation should be in place by April 2007, meaning that Parliament should get to see a bill tabled before them round about March next year. In the immediate future, the DTI sees a three-month workshop period in all provinces and then one final revision before it goes to cabinet as a working document.