Consumer protection laws continue to develop

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Although consumer protection measures have existed in industry-specific legislation, "consumer law" is a relatively new concept in South Africa. Legislation that provided protection to consumers was historically fragmented and outdated, with most consumer-protection mechanisms being incidentally part of other legislation.

The Consumer Affairs Act No 71 of 1988 introduced the Consumer Affairs Committee (CAFCOM), which was authorised to investigate suspicious and possibly abusive business practices. If a particular practice was found to be unfair, CAFCOM could make recommendations to the Minister of Trade and Industry. The minister could declare the offending practice to be unfair and could direct businesses to refrain from engaging in certain conduct. Businesses would then be required to modify their practices accordingly, as failure to adhere to a ministerial directive constituted a criminal offence.

Unfortunately, the Consumer Affairs Act had to be enforced by the South African Police Service and prosecuting authorities, which already had a massive workload.

The National Credit Act No 34 of 2005 (the NCA) was introduced to provide protection to customers for retail credit products, by prescribing formalities for contracts, prohibiting certain terms, regulating certain consequences, and providing enforcement mechanisms in a contractual relationship.

Although the enactment of the NCA was a significant step forward, it became apparent that consumer legislation was in need of a review and overhaul for various reasons, including the persistence of discriminatory and unfair market practices; the proliferation of low-quality and unsafe products; consumers' general lack of awareness of their rights; and the limited redress available to aggrieved consumers, coupled with weak and inefficient enforcement measures.

The Consumer Protection Act No 68 of 2008 (the CPA) was introduced to promote and advance the general social and economic welfare of consumers, by outlining the entitlements of consumers and the responsibilities of suppliers.

The CPA is believed to have assisted in creating a consumer rights-conscious market and placing consumers in a position to enforce their rights, by establishing the National Consumer Commission (to address consumer complaints) and the National Consumer Tribunal (to adjudicate violations and transgressions of the NCA). The CPA has arguably placed consumers in a far better position by clearly defining their rights and putting in place mechanisms for the enforcement of such rights, which lies at the heart of consumer protection.

To bolster consumer protection in the financial services industry, the Financial Services Board published the Treating Customers Fairly (TCF) document in April 2010, which aims to ensure customer protection through strengthened market conduct and regulation. The TCF aims to ensure protection of customers' financial services needs through an ethical and sustainable financial services industry. This will be achieved by ensuring that customers are given clear information; are kept appropriately informed; and that financial services are of an acceptable standard and in accordance with customers' expectations.

The TCF initiative is under way and is intended to be part of National Treasury's Twin Peaks Reform to Financial Regulation, announced by the Minister of Finance in 2011.

Consumer protection legislation has enabled consumers to know their rights and has provided mechanisms to ensure that consumer rights are enforced.

Source: The Times via I-Net Bridge