Consumer And Corporate Regulation Division
Presentation to the Portfolio Committee on
Trade and Industry
29 July 2014
Delegation
• Zodwa Ntuli: Deputy Director General, Consumer and
Corporate Regulation
• Nomsa Motshegare: Chief Executive Officer, National
Credit Regulator
• Ebrahim
Mohamed:
Consumer Commission
Commissioner,
National
• Diane Terblanche: Chairperson, National Consumer
Tribunal
2
Purpose
To brief members of the Portfolio Committee about the
work of Consumer and Corporate Regulation Division
(CCRD) focusing on Consumer Protection
3
Objectives
the dti’s strategic goals are:
Facilitate the transformation of the economy to promote industrial
development, investment, competitiveness and employment creation;
Build mutually beneficial regional and global relations to advance
South Africa ’ s trade, industrial policy and economic development
objectives;
Facilitate broad-based economic participation through targeted
interventions to achieve more inclusive growth;
Create a fair regulatory environment that enables investment, trade
and enterprise development in an equitable and socially responsible
manner; and
Promote a professional, ethical, dynamic, competitive and customerfocused working environment that ensures effective and efficient service
delivery.
4
The objectives of CCRD are:
CCRD Objectives
 To increase access to economic opportunities for small businesses
and historically disadvantaged citizens.
 To develop efficient regulation in order to reduce the regulatory
burden on business and increase confidence and certainty in South
African business regulation.
 To create a business regulatory environment that promotes
competitive, fair and efficient markets.
 To provide access to redress for economic citizens in order to
increase confidence in the markets.
 To promote awareness of rights, duties/responsibilities to increase
activism and public participation.
 To share and exchange regulatory experience with partners
nationally and internationally to promote simple, appropriate and
more effective regulatory solutions.
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Programme 5 of Vote 36
Operational Context
Develop and implement coherent, predictable and transparent
regulatory solutions that facilitate easy access to redress and efficient
regulation for economic citizens
 Policy and Legislative Development – policy development,
legislative drafting, legislative reviews, legislative audits,
drafting and issuing of regulations, amendments of laws and
regulation.
 Enforcement and Compliance – policy and legislative briefs and
reviews, research and trend analysis, market survey, regulatory
impact assessment.
 Regulatory Services – funding of Agencies, sustainability and
effectiveness of Agencies, performance monitoring and
evaluation, leadership of Agencies, accountability and oversight
for Agencies.
6
World Bank Rating
According to the Doing Business Study, South Africa is still facing challenges in getting electricity,
trading across borders, registering property – need to improve in these areas but far ahead of
BRICS counterparts.
7
Agencies
Minister of Trade and Industry
Consumer and Corporate Regulation Division
National Credit Regulator (NCR)
National Consumer Commission (NCC)
Established in terms of section 12 of the
NCA No. 34 of 2005 and is responsible for
the regulation of the South African credit
industry.
Established in terms of Section 85 of the
Consumer Protection Act No. 68 of 2008.
Conducts education, research, registration
of
industry
participants,
investigation
of
complaints, and ensuring the enforcement
of the Act.
Provides consumers with protection on
issues relating to consumer agreements,
product quality, accreditation of industry
codes, investigation of complaints, rights
to refund and repairs.
Consumers
(Individuals;
businesses)
Consumer
protection
Fair market
Conduct
National Consumer Tribunal (NCT)
Established in terms of section 26 of the NCA to adjudicate on matters arising
from the NCA and CPA; Functions – Applications, Declaration of prohibited
practices, Referrals, Reviews, Consent Orders, Interim Relief, Cancelation of
registrations
Equitable
consumer
and credit
market
Consumer
redress
Credit providers and micro
lenders (banks, retailers, etc)
Credit Bureaus
Debt counselling; Payment
distribution Agents
Consumers, suppliers,
credit providers
Provincial consumer
offices
Consumer Ombudsman
8
Consumer Protection
Achievements
 Consumer Protection Act (68 of 2008) was promulgated and
Regulations were issued.
 Benchmark Study conducted with other jurisdictions such as
Australia, New Zealand and Singapore.
 Establishment of the National Consumer Commission process
completed and transfer of staff from the dti Office of Consumer
Protection
 Published Regulations for Genetically Modified Organisms, with a
consultative conference on 25 July 2014.
 Published Notice on Labeling of Goods originating from East
Jerusalem, Gaza or West Bank in terms of section 24 of the CPA
 Published Notice on the Meat Labeling following the meat scandal
 Consumer education and awareness campaigns conducted including
media campaigns
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Credit Regulation
Achievements
National Credit Policy was reviewed to reflect on appropriateness of
policy positions and instruments employed.
National Credit Act amended by National Credit Amendment Act 19 of
2014.
Regulatory Impact Assessment on the amendment process was
conducted and report produced.
Debt Counseling Regulations were developed to address challenges
at Magistrate Courts relating to this process.
Commissioned Research on Feasibility of removing adverse credit
information held by credit bureaus – done through National Credit
Regulator
Draft Regulations for National Credit Amendment Act developed and
will be published end of July 2014
Education and awareness campaigns conducted
10
Removal of Credit Credit information
Credit Regulation
 Parliament concerns about blacklisted who cannot access credit and
employment.
 Research highlighted reckless lending, affordability assessments,
listing requirements, discretionary income, as well as education and
awareness.
 Public consultation and focused sessions with credit providers and
credit bureaus.
 Notice on the Removal of Adverse Credit Information and Paid up
Judgments was published in February 2014 effective 1 April 2014.
 Credit bureaus had two months to remove the information and all
submitted reports to the NCR by 30 June 2014.
 The Notice benefitted about 3 million consumers with 4.5 million
accounts, and saved more in terms of legal costs.
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 Concerns of Over-indebtedness
Credit Regulation
 Economic crisis in 2008 affected consumers negatively
 Failure to conduct affordability assessments by credit providers
 Reckless lending, with increased unsecured lending targeting
low income earners
 Abuse of credit insurance, especially credit life insurance
 Unlawful and deceptive advertising, including unsolicited offers
in the form of pre-approved loans and credit cards
 Expensive monthly loans, or what is referred to as payday loans
 High cost of credit which keeps consumers in a continuous debt
cycle
 Joint Committee between National Treasury, Department of Justice
Constitutional Development and Correctional Services
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Access to rural areas
Contralesa Partnership
 Memorandum of Understanding was negotiated between the dti and
Congress of Traditional Leaders of South Africa (CONTRALESA).
 Partnership launched on 24 November 2011.
 2012-2013 fifty (50) field workers were deployed in all provinces
assisting communities with various queries on consumers,
establishing coops etc.
 Agencies utilise the field workers for educational outreaches,
workshops and referrals.
 The field workers will also assist in recording and registration of
indigenous knowledge.
 Some fieldworkers
government sector.
already
received
permanent
positions
n
13
Initial provincial spread
Contralesa Partnership
Western Cape – KwaLanga, Khayelitsha, George (4)
Northern Cape – Kuruman (2)
North West – Moruleng, Khaya Khulu, Taung (4)
Mpumalanga – Bushbuckridge, KwaMhlanga, Siyabuswa (4)
Limpopo – Maruleng, GaDikgale, Malamulele, Thohoyandou (8)
KwaZulu Natal – Sisonke (Ixopo), Pietermaritzburg, Ndwendwe,
UGU, Khahlamba, Maphumulo, Durban, Mobeni, Nquthu,
Mhlabuyalingana (10)
Free State – Heidelsdal, Makgolokoeng, Qwaqwa, Vrede (4)
Eastern Cape – Cofimvaba, Idutywa, Elliotdale, Libode, Lusikisiki,
Mthatha, Mnqesha, Mqanduli, Willowvale (10)
Gauteng – Tembisa, Soweto, Tshwane (3)
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National Credit Regulator
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Disbursement vs. Outstanding
Debtors Book - Grand Total
•
•
•
•
The total number of credit active consumers as by end of March 2014 are 21.71 million, 56% (12.11 million)
were in good standing.
The number of consumers with impaired records decreased by 329,000 to 9.60 million by end of March 2014,
from 9.93 million in the previous quarter.
Consumers classified in good standing increased by 1.40 million, to 12.11 million consumers.
The total outstanding debtors’ book of consumer credit as at end of March 2014 was R1.55 trillion.
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Credit standing of consumers
•
•
Consumers in “good standing” improved from 51.9% at the end of Dec 2013 to
55.8% for the quarter ended March 2014; and
Consumers with “impaired records” decreased from 48.1% at the end of Dec 2013
to 44.2% at the end of March 2014.
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How much do consumers owe?
•
•
•
Consumers spend more on movable assets than fixed investments such as mortgages.
Most consumer credit is on secured credit, followed by mortgages and unsecured credit.
The banks’ share of total credit granted as by end of March 2014 was R84.74 billion (80.24%),
retailers R3.88 billion (3.67%), Non-bank financiers R6.51 billion (6.16%) and “Other credit
providers” R10.48 billion (9.93%).
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Percentage distribution of
disbursement per credit type
•
•
•
Secured credit remains the leading type of credit granted at 33% of share of credit but
Mortgages has shown some steady improvement in the last quarters.
Mortgages have a share of 29% of new credit extensions while unsecured and credit facilities
have 18% and 15% respectively.
Unsecured credit has been gradually declining over the last three quarters while Mortgages
and Secured credit have shown some steady improvement.
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National Credit Regulator
 Handled >580 000 calls since inception with average 8000 calls per
month.
 Consumers awarded >R16 million in refund and outstanding balance
adjustments.
 A joint 2 day operation took place in the Northern Cape with SAPS to
address illegal collection tactics by credit providers
 15 people were arrested
 620 bank cards, 114 Identity Documents and 577 pension cards
were found.
 Raids were also conducted in KwaZulu Natal, Western Cape and
Eastern Cape.
 Established the Credit Industry Forum (CIF) to facilitate agreements
and address aspects of operational nature in the industry.
 Credit Bureaus registered with NCR are to date fourteen (14).
20
Example of some investigations conducted:
National Credit Regulator
Marikana Investigation - in 2012/13 thirteen (13) microlenders were raided
and alarming reckless lending and illegal debt collection tactics were
discovered – a follow up was conducted this year and no cards as
collateral were found.
Standard Bank was instructed to refund clients for extra administrative
charges.
African Bank for reckless lending and entered into a consent order - paid
R20 million in addition to refunds to consumers.
Consumer Profile Bureau (CPB) for keeping the cause of death
information on its records – compliance noitice was issued.
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National Credit Regulator
Example of some investigations conducted:
Wonga Finance for improper affordability assessment and
record keeping – isued a compliance notice – NCR to brief
Committee on this case in detail.
Satinsky 128 for R699 vehicle scheme for unlawful credit
marketing practices and failure to disclose total cost of credit –
issued compliance notice.
Junk Mail Publishing for publishing credit adverts with
“blacklisted customers welcome” – compliance notice issued
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Debt Counselling
 Number of debt counsellors registered is 2136
 The number of consumers who applied for debt counselling
during the previous financial year was 82 964
 Applications for debt counselling to date from inception is
279 797 – on average per month since the beginning of
this year (2014) were 10900
 Number of clearance certificates is 5544 as at June 2014 –
new amendments now allow early rehabilitation
 Amount distributed to credit providers since inception to
date is > R14.7 billion
23
Payment Distribution
 New entrants in the industry outside NCA framework.
 Governed through Service Level Agreement with NCR.
 Payment Distributing Agents statistics:
 Total distribution since inception is in access of R13.9
billion
 Average number of credit agreements per consumer is
seven (7)
 Total amount distributed for the month of April R359 million
 New amendments regulates it more effectively and curb
costs to consumers
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Educational Outreaches
 Workshops with Provincial Consumer Desks, Trade Unions,
Government departments and employers.
 Good exposure across all media channels - total Advertising
Value Equivalency (AVE) of R213 million for the past
financial year alone.
 Bill boards also found to be valuable in reaching out to
communities with targeted messages.
 Participated in exhibitions, activations and road shows across
the country at 11 tertiary institutions.
 Participated in the Contralesa initiative of the dti - the NCR
has been able to empower rural communities.
 Participated in various TV Interviews reaching millions of
consumers.
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National Consumer Commission
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Statistics
 In 2011/12, the calls and complaints logged were very high, the role
of other regulators diminished as all complaints were logged with the
NCC.
 In 2012/13, the strategy was redefined and the NCC focused on
referrals and investigations.
 In 2013/14, the emphasis is more on referrals, and investigation and
finalising the backlog.
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Complaints Resolution
 The NCC has facilitated conciliations between suppliers and
consumers resulting in refunds, replacements of goods and
negotiated settlements.
 Some examples of the settlements are:
 A full refund for a consumer that bought a bottled purified water
franchise from an entity called H2O for R210 900,
 A full refund for a consumer who paid residential property
deposit to Mistry Blue Investments in the sum of R63 000
 The franchise, Old Fashioned Fish and Chips, refunded
R100 000 to a consumer.
 MTN agreed to reconcile a consumer’s statement and pass a
credit in the amount of R123 190.43.
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Investigations
Conducted the following investigations:
Meat labelling – investigation was concluded and the Notice on
Meat Labelling is being enforced.
Cell phone agreement - Contract terms and conditions were
revised and included the pricing. The contacts are 100% (area that
is still outstanding S63 that talks to expiry of data/ airtime).
SANRAL - investigation led to revision on terms and conditions eTag pre-implementation of e-Tolls; provision of sales records and
their collection method that was unconscionable during the
implementation phase.
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Recalling of products
 Guidelines for recalls were developed and published for comments in 2012.
 Recalls were facilitated and communicated for the following products:
 Meat Labelling (Horse Meat) Findus Foods. There were seventeen
products imported by Findus South Africa (Sea Harvest), only one
contained beef as an ingredient. The company, as a precaution, withdrew
the product from the market and conducted DNA analysis to determine
any possible trace of horse meat.
 Twenty (20) product safety recall Notifications were issued in 2013/14
 UD Trucks (E06, E11 and E12 Models) by UD Trucks Southern Africa.
 Mastercraft Bottle Jacks by Massmart.
 Mastercraft 2 ton trolley jack by Massmart.
 Mastercraft 3 ton garage jack by Massmart.
 Honda Jazz - Master Switch by Honda Motors Southern Africa.
 Honda FR - V and S2000- Brake Booster by Honda Motors Southern
Africa.
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Recalling of products
 Garmin quatix watch by Garmin International.
 Dettol disinfectant liquid as per the National Regulator for Compulsory
Specifications (NRCS).
 Easton Axis arrows by Easton Technical Products.
 Spray paint (Homestead and Spectra spray brands) by Spectra Spray.
 Spray paint (Primaries) by Spectra Spray.
 Bosch and Siemens Dishwashers by BSH Home Appliances.
 Womens sandals with metal trim by Woolworths.
 Samaritan PDU 400 home semi-automatic defibrillator by HeartSine
Technologies.
 Navigator HD Ureteral access sheath set by Boston Scientific.
 Diesel return line manufactured for the Volkswagen Amarok 2.0l CR TDI models
by Volkswagen South Africa.
 Chevrolet Trailblazer tow bar by General Motors South Africa.
 Chevrolet Spark 1.2 (M300) by General Motors South Africa.
 Toyota Prius (ECU Recalibration) by Toyota SA Motors.
 Lenovo Thinkpad computers battery by Lenovo S.A.
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National Consumer Tribunal
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National Consumer Tribunal
There are approximately 35 different types of applications and 150 different types
of referrals from the NCA and CPA that may be brought to the NCT, including
provision for a matter that can be brought from an application to the High Court.
In the past financial year the NCT has seen an increase in the number, types and
complexity of applications filed both in terms of the CPA and the NCA.
The Tribunal has received a total number of 5386 applications for adjudication in
2013/14, which is a 28.4% increase from the number of applications filed in
2012/13.
The majority of the applications are applications for consent orders in respect of
debt re-arrangement agreements.
The NCT imposed the administrative fine of R900 000 in the case against
Lebathu Finance, which was trading as Werlan Cash Loans – failed to register as
a credit provider and ignored a compliance notice issued.
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The challenges exist for agencies:
Challenges
 Funding continue to be limited for expanding mandate of the
NCR, NCC and NCT – donor funding being sourced where
possible.
 Increasing workload from the NCR and NCC impact on the
human and financial resources of the NCT – prioritisation is being
applied to manage workload effectively
 Functioning on manual and ageing IT systems – NCR will be
replacing the system while NCT will be automating their manual
system
 Scarce skills in dealing with specialised regulatory issues remain
a chalenge – all entities are implementing internships to grow
their own trees
 Space continues to be a challenge for the NCR, but the financial
resources available does not permit bigger premises.
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 Priority Areas for CCRD:
Future Work
 Regulations for implementation of the National Credit Amendment
Act, as well as for Genetically Modified Organisms.
 Strenthen education and awareness programs, especially through
radio and outreach programs in rural areas with Contralesa.
 Building capacity for inspections across agencies, to enable raids
and mystery shopping to uncover violations proactively.
 Improve visibility and accessibility of the agencies, especially the
NCC.
 Conduct regulatory impact assessments on an ongoing basis to
detect and remove unnecessary and redundant regulations.
 Appeal for funding for the agencies to implement their mandate
effectively.
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Conclusion
Thank You
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