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Consumer Protection Act and its regulations protects both consumers and suppliers






Consumers aren’t alone in benefitting from the Consumer Protection Act, which came into force on 1st April this year.  Suppliers also benefit, says Julie Methven, CEO of the Compliance Institute of South Africa.


The new Act regulates most products and services supplied in the ordinary course of business to individuals and small business.  It does not apply to any credit component of products or services, as that falls under the National Credit Act. It also not apply to services governed by the Financial Advisory and Intermediary Services Act, or products and services governed by the Long-term and Short-term Insurance Acts  - for at least 18 months after 1 April 2011. 


Final consumer protection regulations were gazetted at the end of March this year, effective 1st of April.  These further elaborate on certain matters covered by the Act, such as what forms are to be used and what will be required in franchise agreements that fall within the Act.


“The law regarding consumer protection was fragmented, which created uncertainty for suppliers in terms of their compliance duties. The new Act and its regulations go a long way towards providing a more coherent environment for suppliers,” Methven says. 


For example, the regulations list in the region of 31 contract terms that will be presumed not to be fair and reasonable.


“Many of these contract terms would in any event be found unreasonable in terms of common law and case law. However, most of us do not have immediate access to this type of information. Listing unreasonable terms, and stating what would generally be considered unreasonable, will improve legal certainty for many suppliers,” says Methven.


“The regulations also reinvigorate past attempts to manage areas that require consumer protection, but for one or other reason failed to do so,” she says.  


The Consumer Affairs (Unfair Business Practices) Act, for example, has a notice that covers property syndication schemes. However, this law has fallen off, perhaps because it  focused on specific complaints as opposed to general regulation, and lacked mechanisms (such as guidance notes, commissions with general powers, etc.) to enforce it. That Act will be repealed by the Consumer Protection Act and a revised property syndication scheme will receive more attention within the new extensive mechanisms that will exist within the Consumer Protection Act.


A further example is the mostly unknown Sale and Services Matters Act, which makes provision that requirements may be set for a seller or auctioneer at a sale of goods by auction, to ensure compliance with that Act.


“One would be hard-pressed to find such notices easily and enforcement of the limited protection of that Act has been virtually non-existent. This despite the fact that, due to a recession and other factors, there has been a massive growth in sales on traditional and online auctions, with auction houses commanding a 21% fee from both the seller and the purchaser and, at times, blatantly allowing the artificial increase in a bid price,” says Methven.


A quarter of the consumer protection regulations is now dedicated to auctions, and shows an understanding of the need and seriousness to regulate auction houses.

Source: Claire Densham Communications
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