The ombudsman cometh

© Agata GÅ?adykowska – 123RF.com

Since it became compulsory at the beginning of May 2015 for businesses whose activities fall within the supply chain that provides, markets and/or offers to supply consumer goods and services to register with CGSO and contribute towards the cost of running it, only 45 businesses out of the estimated 20,000 high-turnover companies in the CGSO's scope have signed up. This brings to 65 the total number of participants registered, including those far-sighted consumer goods companies that bought in and registered as members while CGSO still operated as a voluntary scheme. Now that it has become mandatory, non-compliant companies are contravening the Consumer Protection Act (CPA).

This inertia led to CGSO having to appoint Trifecta Capital to create a database of eligible businesses and to manage registration of participants. This step and the possible need to resort to legal action to compel compliance will drive costs up further, to the detriment of those businesses that complied willingly, and detract from the key mission of assisting consumers and businesses to resolve their disputes. The situation is untenable and unfair to businesses that are carrying CGSO's operating expenses, which are considerable given the volume of cases handled. During 2014, 4,500 complaints were processed.

A recourse mechanism

The CGSO provides a recourse mechanism for consumers dealing with businesses operating within the consumer goods and services supply chain, with the exception of the motor and financial industries or other organisations regulated elsewhere. Participation in the scheme should be regarded as an extension of companies' commitment to customer service and consumers see participation in the scheme as a reflection of this.

The attitude of the broad consumer goods and services industry is out of step with that adopted in a wide range of other South African industries, which seized the opportunity to self-regulate or co-regulate with the government. In sharp contrast, the office of the long-term insurance ombudsman is one of the longest operating commercial sector ombudsman schemes in the world, having been established in 1985. In addition to other financial sector ombudsman schemes, such entities have been established for the press, the motor industry and various branches of the medical profession. The trend has been mirrored within the state environment with the creation of city ombudsmen and the tax ombudsman.

In the UK, by all accounts, it appears that the retail ombudsman that started operating at the beginning of this year already enjoys broad support within that industry.

In their tardiness to register with CGSO, South African businesses are overlooking the many internationally acknowledged benefits of belonging to an ombudsman scheme, some of which are evident from these quotes:

It is hoped that those businesses that are holding out will have a change of heart and embrace the new reality.

To learn more about the benefits of belonging to CGSO, download the document: Why the consumer goods and services ombud? here.

If you have any enquiries, kindly refer to http://www.cgso.org.za/participant-faqs/ or contact Queen Munyai: (011) 781 3128; az.gro.osgc@mneeuq.