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Code of Conduct a further step in empowering consumers

It used to be that if one wished to complain about particular goods purchased or services received, one would need to wait in a queue in some dark corner of a store and argue one's case before a disinterested clerk. As of 30 March 2015, the processes for lodging a complaint about goods purchased or services received are now completely different.
Code of Conduct a further step in empowering consumers
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The Minister of Trade and Industry has published a Code of Conduct for the Consumer Goods and Services Industry, which has two primary functions:

  • the creation of the so-called Consumer Goods and Services Ombud; and
  • requirements for suppliers of goods or services to create and maintain a complaints-handling procedure.

The Code applies to all providers of goods and services in the Republic of South Africa except those specifically excluded by paragraph 4.4 of the Code. Therefore every transaction to which the Consumer Protection Act No. 68 of 2008 (CPA) applies is directly affected by the Code. This means that suppliers of both goods and services operating in the Republic must ensure that they comply with the provisions of section C and paragraph 5 of the Code.

Complaints-handling process

The primary obligation on suppliers under the Code is to establish an effective complaints-handling process. This process must be accessible to and easily understandable by consumers. The process has to include, as a minimum, setting out the process a consumer must follow to lodge a complaint with a supplier, the design of the complaints-handling process and a system to monitor the effectiveness of the complaints-handling process.

In addition to the complaints-handling process, suppliers are required to display notices stating that they comply with the Code and erect notices referring to the Consumer Goods and Services Ombud stating that they are participants for purposes of the Code.

The complaints-handling process must also be directly available to consumers and complaints-related documents must be kept for a period of three years from the date of the lodgement of the complaint. The date that it is captured, in terms of the Code, must be used to identify recurring problems and identify remedies to address such problems. In addition, the data may be used to provide information to the Ombud.

In terms of paragraph 5.1.11, suppliers are required to cooperate with the Ombud and the National Consumer Commission in so far as the implementation of the Code is concerned. Any failure to cooperate with the Ombud will be taken "...into consideration by the [National Consumer Commission] and the Tribunal when issuing a compliance notice or proposing or determining an administrative fine".

The Ombud

Section D in paragraph 6 creates the office of the Ombud. The Ombud will be financed through contributions by participants as participants will be required to pay a joining fee and an annual levy which shall be determined by the Board of the Ombud. In terms of paragraph 6.2.2, fees will be determined with reference to a participant's market share. In addition, the Ombud has the power to raise a special levy where required.

The Ombud is to act independently and determine complaints in such a capacity. The primary function of the Ombud is to process complaints. To this end, section F sets out the process to be followed for purposes of laying a complaint. The complaints process consists of four stages, the first of which is laying the complaint, the second is the referral of the complaint to the office of the Ombud, the third is the resolution of the complaint by the participant and the fourth is an investigation and complaint resolution by the Ombud.

The jurisdiction of the Ombud is limited to dealing with disputes between complainants and participants as well as complaints in respect of alleged contraventions of the CPA or the Code. Limits have been imposed on the Ombud's jurisdiction in so far as:

  • the Ombud may not consider a complaint relating to a juristic person as a consumer where that consumer's asset value or annual turnover equals or exceeds the threshold amount determined in terms of section 6(1) of the CPA, which is currently R2,000,000;
  • complaints that arose before 1 April 2011 or claims that may have prescribed in law;
  • a matter that falls in the jurisdiction of another Ombud or becomes the subject matter of litigation or a complaint before another tribunal or regulatory body or is a matter more appropriately dealt with by the South African Police Services or a court;
  • the Ombud will not deal with complaints that are frivolous, unreasonable, vexatious, offensive, threatening or abusive, lack substantive merit, have already been substantially dealt with by the Ombud, are based on facts that are already before a court or another tribunal, lack merits or are under consideration by a legal practitioner on behalf of a consumer whether or not the intention is to institute legal proceedings against a supplier. A complaints form is prescribed as Annexure B to the Code.

The powers of the Ombud are dealt with in Annexure A to the Code. The primary power of the Ombud is to deal with and resolve complaints referred to his or her office and conduct the day-to-day administration of the Ombud's office.

Primarily, the complaints-handling process is one that requires participants to deal with consumer complaints in the first instance in accordance with the applicable complaints-handling process. Where a consumer is dissatisfied with the outcome of the complaint, he or she may then refer the complaint to the Ombud and the Ombud will then deal with the complaint on its merits.

Process followed

Complaints dealt with by the Ombud are to be dealt with as expeditiously as possible but within at least sixty business days of receipt of the complaint by the Ombud. Participants may intervene in a complaint where the Ombud refers a complaint to a participant in order for the participant to resolve the complaint.

Where the complaint is dealt with by the Ombud, the Ombud follows the process in stage 4 of the Code, which consists of an investigative phase, a settlement phase, formal mediation and then recommendations by the Ombud in respect of the resolution of the complaint.

The Code introduces real consequences for complaints-processing by suppliers and constitutes a further step in respect of the empowerment of consumers. The primary advantage of the Code is its accessibility to consumers without requiring the consumer to incur great expense in respect of resolving his or her complaint.

The Code also represents the possibility of complaints being resolved with substantive outcomes that are realisable in the hands of the consumer. The other advantage of the Code is that it brings back into sharp focus the various consumer rights already created in South African law by the CPA.

About Neil Kirby

Neil Kirby is director: health care and life sciences law of Werksmans. He is the chair of the Medicine and Law Committee of the International Bar Association. Kirby has been named as a leading lawyer in Dispute Resolution by Chambers Global: The World's Leading Lawyers for Business (2008 - 2013), and has published numerous articles in his various fields of speciality.



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