Section 82 of the Consumer Protection Act, 2008 (the CPA) requires the National Consumer Commission (the NCC) to process applications for the accreditation of industry codes and alternative dispute resolution ombud schemes and to thereafter make recommendations to the Minister of Trade and Industry regarding their approval. Section 82 further requires the NCC to put in place monitoring systems to ensure the effectiveness of these codes and ombud schemes.
Since the inception of the CPA industry groups have endeavoured to formulate the requisite codes of conduct, however, these efforts have been hampered as the initial draft guidelines for the development of industry codes of conduct for accreditation under the CPA did not sufficiently accommodate different industry configurations. In order to remedy this, further guidelines have now been published for comment. These guidelines outline how industry codes and ombud schemes should be drafted in order to be accredited as compliant with the CPA and detail the minimum content of such codes. For instance, the industry code must be written in plain language such that an ordinary consumer of the class of persons for whom the code is intended, with average literacy skills and minimal experience as a consumer of the relevant goods or services, could be expected to understand its provisions.
The purpose of accredited codes is to raise the standard of conduct of industry groups, to promote consistent behaviour across an industry, to reduce consumer dissatisfaction and complaints and to enhance sufficient compliance with the CPA and all other relevant public regulations.
The guidelines traverse everything from the interpretation, definitions and language to be used in these codes to the implementation and review of these codes, as well as the establishment of the office of an ombud and the dispute resolution and complaints handling process.
It will remain the responsibility of industry groups to produce, distribute, promote and evaluate their codes. An accredited code must also include a strategy for creating awareness amongst industry players and consumers on the code and its content.
Accredited codes will regulate the interactions between persons conducting business within an industry and consumers, and provide a simple and accessible alternative dispute resolution mechanism to consumers. The provisions of these codes will be mandatory for all suppliers belonging to the industry.
Before an industry code can be presented to the NCC for accreditation, it must contain certain minimum information. This would include the application and scope of the code, details of how the code will be implemented and reviewed, including provisions requiring the collection of data regarding the origins and causes of complaints, a mandatory consultation process before the code is submitted to the NCC for accreditation and that employees and agents be instructed in the codes’ principles and procedures.
The guidelines further detail the complaints handling process to be followed. Complaints should be submitted to the industry ombud as soon as is reasonably possible and may not be submitted more than three years from the date on which the cause of complaint arose. Arbitration as an alternative dispute resolution mechanism is excluded. Instead, where a dispute remains unresolved after conciliation or mediation, a matter may have to be referred to the NCC. The time limit for the resolution of complaints must be no less than three months. Consumers benefit in that access to the complaints handling process will be free of charge to a complainant.
Finally, an accredited code will also encompass the development, adoption and application of a safety monitoring and safety recall mechanism within the industry. This will provide greater certainty and control for industries that promulgate these codes.
An application for accreditation must include an undertaking by the applicant to co-operate and comply with all reasonable requirements of the NCC. During the accreditation process, the industry code will be published for public comment and a code may only be considered accredited under section 82 of the CPA once the Minister’s approval is published via a notice in the government gazette.
While a code may propose the establishment of an ombud scheme and there are various guidelines in this regard, existing industry ombud schemes that the NCC consider adequate in terms of public regulation may also be recommended for accreditation.
Effective industry codes can reduce the regulatory burden for business and result in greater protection of consumer rights. However, accredited industry codes will only have the desired impact if they are efficiently implemented and administered, which will come at a cost. The financial burden on signatories to an industry code is to be addressed through a funding model for the maintenance of the code and the efficient operation of the ombud scheme.
Accredited industry ombudsmen will also alleviate the burden on the NCC and as the public will be able to approach the accredited industry ombud directly, in terms of section 69(c)(i) of the CPA, to enforce any right in terms of the CPA or any contravention of an accredited industry code, which will be equated with a contravention of the CPA. This will result in a greater number of consumer complaints being processed, to the benefit of all consumers.
Industry codes are generally perceived as less intrusive than regulations and easier to adjust to meet the changing needs of industry groups and consumers than legislation. Accredited codes will reduce legal uncertainty and should be a mutually beneficial exercise for both consumers and suppliers.
Trisha Ramnarain Sarkas is an associate and Philippa Beasley is a candidate attorney at Norton Rose SA.