Portfolio Committee on Trade and Industry
Stakeholders remain adamant that certain provisions of proposed consumer protection legislation will be in direct conflict with existing pieces of consumer-related legislation in various sectors. The Banking Association recommended, during public hearings on the Consumer Protection Bill, that the consumer protection provisions contained in the National Credit Act (NCA) be excluded from the ambit of the Consumer Protection Bill. The bill should make it clear that the credit industry would not be excluded from section 35 that dealt with customer loyalty programmes. The Association was concerned that the bill’s definition on service did not extend to intermediary services as covered in the Financial Advisory and Intermediary Services (FAIS) Act. The partial exclusion created uncertainty and additional compliance costs for the banking industry. The Association proposed that all services currently regulated by the FAIS Act be excluded from the bill.
The bill contained overlaps with the NCA and the Association recommended that the particular sections in conflict with the NCA should be adapted to remove this anomaly. Ultimately, all credit agreements should be removed from the ambit of the bill. Continuous credit arrangements such as overdrafts would not be able to meet the bill’s stipulations on price as the total amount would not be known at the time of the initial transaction. The bill would have to clearly state whether a bank would be liable for any damage caused by goods bought on instalment. The Association proposed that instalment sales should be excluded from the definition of supply. The section on fixed term agreements would create problems if applicable for credit agreements. The bill would allow consumers to cancel an agreement without any penalty.
The Association proposed that the section on the consumer’s right to return goods be aligned with the NCA that allowed a supplier to recover reasonable costs. The bill’s section on the consumer’s right to safe, good quality goods would have a detrimental effect on the second-hand car market if the provisions applied to credit agreements. Suppliers would no longer be able to sell second-hand cars on the voetstoots basis as liability for latent defects would now be introduced for second-hand goods. The section on granting consumers the right to cancel advance reservations, bookings and orders should apply only to services and not to goods. Suppliers should retain the right to alter customer loyalty programmes, after notifying customers, in accordance with changing circumstances.
Cosatu, in its submission, declared that individual consumer rights should not override “broader public interest and developmental objectives” in terms of land reform and access to housing. The bill should contain a chapter on the state’s role as a service provider and recognise the need for cross-subsidisation to facilitate free basic services. Cross-subsidisation has obvious implications for a consumer’s right to pay a fair price for goods or services. The bill had to explicitly include companies and co-operatives into the definition of a juristic person.
Cosatu expressed concern that the provisions of the bill would prevail if in conflict with another piece of legislation. This would place the bill in conflict with section 210 of the Labour Relations Act. Cosatu argued that the supply of any services by a trade union to its members should not be construed as a transaction between a supplier and a consumer. The exclusion of genetically modified organisms (GMO) from the section on liability of suppliers for damage caused by goods was problematic. Cosatu proposed that the bill include liability in respect of GMOs and stipulate that producers had to clearly label goods to indicate the presence of GMOs.