Thank you very much, Chair and members of the NCOP, for your birthday wishes. [Interjections.] I will provide a cake if you adopt this Bill. [Laughter.]
Chairperson and hon members, the purpose of the Consumer Protection Bill that is being debated today is to promote and advance the social and economic welfare of consumers in South Africa. The Bill makes provision for a comprehensive and overarching consumer law of general application that will regulate interaction between businesses and consumers in the South African market.
The new Bill replaces, in a new and simplified manner, existing provisions from Acts including the Consumer Affairs (Unfair Business Practices) Act of 1988, the Trade Practices Act of 1976, the Sales and Service Matters Act of 1964, the Price Control Act of 1964 and section 12 to 13 and section 16 to 17 of the Merchandise Marks Act of 1941. It also introduces new and beneficial measures for the protection of consumers. In particular, the proposed Bill will give consumers basic rights by doing the following: Prohibiting certain conduct encoding common law principles; providing for the establishment of effective redress mechanisms for consumers; recognising and supporting the role of consumer NGOs; and promoting customer responsiveness in the public and private sectors. It further expands the mandate of the Office of Consumer Protection by converting it into a statutory body named the National Consumer Commission.
In 2003, the Department of Trade and Industry embarked on an extensive evaluation of the regulatory environment and institutions governing consumer protection in South Africa. Results from a consumer survey and an audit of consumer protection measures in South Africa reveal that the regulatory framework for consumer protection is outdated and fragmented, resulting in the prevalence of consumer abuses and very limited access to redress for rural and low-income consumers. Some of the abuses identified include unfair contract terms, misleading and fraudulent advertising, nonhonouring of guarantees, abuse of personal information and nondisclosure of terms and conditions and poor product quality. Approximately 85% of consumers were found not to be aware of their rights and the mechanisms they could use to obtain redress. In instances where consumers lodged complaints with suppliers, almost 50% of their problems were not resolved or attended to. A majority of sector laws were found to focus on prudential regulation with market conduct either addressed in a limited manner or completely left to self-regulation, as is the case in the banking sector.
The new Bill addressed these challenges by adopting a rights-based approach aimed at asserting consumer rights when transacting with suppliers. This approach is internationally recognised, and it is in line with the United Nations' adopted consumer rights. These rights include the following: The right to disclosure of information; the consumer's right to choose; the right to product safety; the right to fair and reasonable terms and conditions; the right to fair value and quality; the right to privacy; the right to fair and responsible marketing; and the right to consumer education and redress.
The Bill backs up these rights by giving consumers the right to receive documents that are written in plain and understandable language that prohibits unfair contract terms and enhances consumer choice by requiring disclosure and information with regard to prices, contract terms, product quality, safety, guarantees and warranties.
Advertising, marketing and promotions have to adhere to certain standards, including that they should not be misleading, fraudulent or misrepresent any facts to the consumer about the benefits of a particular product, service or scheme. In addition, the Bill provides for a system of product liability where any producer, distributor or supplier will be liable for any damage in the form of death, injury, loss or damage to property and economic loss to the consumer or third party. The Bill contains a general prohibition against producing or distributing unsafe goods and knowingly supplying them to consumers. To ensure the safety of consumers, manufacturers and suppliers are under obligation to investigate and recall defective products. The National Consumer Commission is also given powers to investigate and recall products if manufacturers and suppliers do not take the required steps.
The Bill promotes consumer activism. The department believes that having informed and active consumers will enhance market and price competition. The Bill proposes a partnership between government and civil society. Such a partnership recognises the need to build the capacity of the consumer non- profit sector and equip it to provide face-to-face services such as legal advice, counselling and mediation. To realise this vision, government needs to recognise consumer non-profit organisations in law. The Bill provides for the accreditation of consumer protection groups and possible financial support for activities such as consumer advice, education, publications, research and alternative dispute resolution through mediation or conciliation.
The Bill aims to make redress accessible and protect consumers from being victimised if they act to enforce their rights. Clause 69 of the Bill outlines the available avenues of redress, including courts, alternative dispute resolution and complaints to the National Consumer Commission. If a complaint arises in an industry in which a statutory ombud scheme is in place, the consumer must pursue a resolution through that scheme before making a complaint to the National Consumer Commission. An ombud, consumer court or provincial authority that has resolved the complaint may record the agreement as an order, which must then be confirmed as a consent order by the National Consumer Tribunal or the courts. If a complaint is made to the commission, the commission investigate and may make a referral to the National Consumer Tribunal, which may resolve the matter by making certain orders as contemplated in clause 5.
In order to afford consumers improved redress, the Bill decriminalises certain conduct and subjects it to administrative sanctions. This is important because the research conducted indicated that most consumers would prefer immediate remedies like refunds and replacements rather than criminal sanctions being imposed on the supplier. However, the Bill does provide for serious misconduct to be dealt with criminally and therefore subject to normal court procedures. Clause 82 of the Bill establishes a scheme for the development of industry codes of conduct relating to consumer matters, and provides for them to receive the force of law being prescribed by the Minister.
The Bill recognises that consumer protection is a matter that falls under the functional area of concurrent jurisdiction between provincial and national government in terms of Schedule 4 of the Constitution. To this end, the Bill provides for the Minister to consult members of the provincial executive councils responsible for consumer affairs with respect to the following: Co-ordination and harmonisation of the functions of the National Consumer Commission and the provincial consumer protection authorities; facilitation of settlement of any dispute between the National Consumer Commission and any provincial consumer protection authority; and determination of steps to be taken to ensure the performance of a particular function by a provincial consumer protection authority in the case where no provincial consumer protection authority has been established or in the case where the Minister has concluded that the existing provincial consumer protection authority is unable to perform that function effectively.
The Bill further sets out matters that provincial consumer protection authorities have jurisdiction over in respect of activities occurring or applications by persons carrying on business exclusively within their provinces, including the following: The issuing, on behalf of the National Consumer Commission, of compliance notices; facilitation of mediation and conciliation of disputes arising in terms of this Act; and referral of unresolved disputes to provincial consumer courts. The provincial consumer protection authorities may also request the National Consumer Commission to initiate a complaint in respect of any apparent prohibited conduct or offence in terms of this Act.
The Bill provides for the establishment of the National Consumer Commission which will absorb the current capacity that exists within the Department of Trade and Industry in the Office of Consumer Protection. The National Consumer Commission will be made a statutory body with its mandate to proactively identify, investigate and prosecute contraventions of the consumer law before the National Consumer Tribunal. It will also implement national awareness and education programmes.
It is important to note that the consumer tribunal will be a shared authority between the National Consumer Commission and the National Credit Regulator. Provision has already been made for the establishment of the consumer tribunal in terms of the National Credit Act. Therefore, the department will not be establishing two separate tribunals.
The role of the courts will be to adjudicate all matters that relate to alleged offences in terms of the Consumer Protection Act and to issue declaratory and consent orders, as well as to adjudicate in all contractual matters. The decisions of the tribunal can be appealed against or reviewed by the High Court.
In conclusion, consumers drive competitiveness and economic growth. Well- informed consumers stimulate innovation, better quality products and service and competitive prices. Fair trade is dependent on a sound consumer protection regime, ethical business conduct and compliance, and a vibrant civil society. Government seeks, through this Bill, to achieve this triangle of co-operation. The Consumer Protection Bill seeks to create and promote an economic environment that supports and strengthens a culture of consumer rights and responsibilities whilst, through the measures adopted herein, it seeks to promote a fair, efficient and transparent marketplace for consumers and business. This aspect complements the principles of competition policy, which is also concerned with promoting efficiency and competitiveness of our markets.
I would like to express my thanks to the Select Committee on Economic and Foreign Affairs who helped us to steer the legislation to this point and for their invaluable contributions. Thanks go to my provincial colleagues and their officials for their assistance and inputs. My thanks also go to the team from the Department of Trade and Industry and the Office of Consumer Protection for their hard work. These officials have actually done an incredible amount of hard work over the last few months because there are a number of pieces of legislation that are in front of both the NCOP and the National Assembly. So, they worked incredibly hard, and I would like to thank them today for their dedication and hard work.
I should also give special thanks to many in the industry and in various social groups that went out of their way to ensure that we addressed economic needs and reality whilst ensuring social responsibility.
I commend the Bill to the Chamber. Thank you very much.