To serve and protect

To much applause, the Consumer Protection Act (CPA) is now in full swing. GAVIN MYERS briefly explores the act and what it means for consumers and the industry.

The South African consumer had been looking forward to Friday, 1 April 2011. This was the day that the new Consumer Protection Act (CPA) came into effect, bringing with it a whole new era in consumerism, and specifically the protection of the consumer.

We may not have heard too much about it over the past few years, but the Act has been in the making since 2008. The new legislation is, in actual fact, nothing really ground-breaking, as South Africa has had a good history of consumer protection up to this point.

However, while there were around 48 pieces of legislation pertaining to the issue previously, these were placed within various other laws. With the CPA, everything is brought together in one all-encompassing document.

Speaking at the Tyre Dealers and Fitment Association (TDAFA) conference at Automechanika in March, Nick Grobelaar, alternate chairperson of the Free State Consumer Tribunal and an Advocate of the High Court of South Africa, explained the Act to delegates from the perspective of a legal practitioner. Describing it as a very wide, socio-economic piece of legislation, Grobelaar points out the basis for the formation of the Act.

He notes that it exists for the promotion and advancement of social and economic welfare for all, the promotion of good business practice and confidence, the protection of all consumers, and to provide effective means of redress. “The Act is not there to close businesses; it’s there to regulate them,” he says, “to stamp out unfair practice and to make sure everything is fair, just and equitable.”

An interesting aside is that the state is not protected by the Act as a consumer, but is held liable as a supplier of goods and services (though I’d like to see if they can be held at all liable for their contribution to the astronomical price of travelling, and the generally poor level of public transport in South Africa).

Brandon Cohen, compliance manager of Associated Motor Holdings, also spoke on the subject at the RMI Business Conference at Automechanika. He indicated that as the Act covers the entire business environment, it was deemed necessary for each individual industry to develop its own set of rules or Code of Conduct.

The automotive industry was chosen to pilot the Code of Conduct concept, which was developed over the past two years with input from motor associations such as NAAMSA, RMI, AMID, IDA, NAACAM and MIOSA. It was submitted to the National Consumer Commission in mid-February, and will have Regulation status once accredited by the Minister.

So what does this all mean? Transparency is the buzzword. In essence, every detail has to be made clear to the consumer in plain, understandable language in order to avoid misunderstandings, which hopefully means farewell to fine print. According to Grobelaar, it will be beneficial for consumers to become aware of their nine basic consumer rights. Businesses, in particular the motor industry, will therefore find themselves having to place more and more emphasis on customer service and satisfaction, too. Retailers and their entire associated supply chain are jointly and severally liable, but at the same time the Act also protects small businesses.

According to Cohen, it will have positives for the industry as well: changing the perception of the industry will be a lot easier as customer trust and support grow, and repeat business should naturally follow. “The Act should not be regarded by the motor industry as the end of the world. It is good and creates opportunities,” says Cohen. “In fact, it is a real positive.” Possibly the biggest advantage is that the Act leads to self-regulation – an area where the automotive industry is now leading the way.

As stated, the legislation is far-reaching, but some of the more important points to note as far as business practice in the automotive industry is concerned, centre on direct marketing and product bundling; trademark protection on “parallel” imports that will create a clear distinction between genuine and parallel (pirate) parts; dealing with recalls, material defects and faulty components; and reducing grey imports.

As far as recalls and defects are concerned, manufacturers will be forced to notify customers of a recall, and the manufacturer or dealer must replace the faulty component or part. The same principle applies to the customer’s right to return an item that has failed, or become defective or hazardous – the dealer can repair it, replace it or give the customer his money back.

“The main thing here is to work with the customer. What this Act does is place the emphasis where it should be, namely on customer care and good customer relations. Companies that follow sound business principles and standards, offer quality products and maintain good customer relations, should welcome the new legislation,” says Cohen.

A booklet and documentation detailing the Act are available from the Department of Trade and Industry.