Consumer Law Review_May/June 2013

Published on: Jul 01, 2013

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May/June 2013

Dear Consumer Law Review recipient

Consumer law policy making has been taking place thick and fast in the last month. See our new feature called ‘Consumer law in parliament’ for a summary of all the new movements.

PoPI is edging ever closer to becoming law. On 12 June 2013, the Select Committee of the National Council of Provinces accepted and tabled the Bill with some minor (mostly cosmetic) changes. In this issue we include an article on privacy policies.

The credit industry is in a state of flux. See ‘Consumer law in parliament’ for a summary of all the developments in this area. Paul Esselaar also makes a short contribution on the National Credit Act Amendment Bill.

A new Consumer Goods and Services Ombud has been appointed. It would seem that the Consumer Goods Goods Council of South Africa wants to make sure that its voluntary ombud scheme is up and running by the time that it receives accreditation.

Exciting times!

Elizabeth de Stadler

Elizabeth de Stadler is the editor of the Consumer Law Review and a senior associate at Esselaar Attorneys in Cape Town ( Her practice consists of general regulatory compliance due diligences; training and workshops on regulatory compliance; opinion work on the CPA, the National Credit Act, banking law, gaming and lotteries, insurance, medical law, marketing law, contract law; and plain language drafting.

She conducts regular workshops and training sessions on the CPA and other consumer legislation for businesses and for Law@work, a unit situated within the Law Faculty at the University of Cape Town. She is the co-author of a consumer law textbook and a guide to plain language legal drafting, both of which are to be published by Juta Law.


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— Consumer law in parliament

— A new consumer goods ombud

— Intro to PoPI (part 5): Rethinking privacy policies

— National Credit Act Amendment Bill

— Plain language tip

Consumer law in parliament

Consumer law policy-making has become a regular item on the parliamentary agenda. To this end we have decided to include a new feature in Consumer Law Review dedicated to providing short summaries of these events. The content is provided by courtesy of Legal Brief Policy Watch and CLR readers will be given access to the full articles referred to in this summary.

Changes to PPI Bill proposed: Among changes to the Protection of Personal Information Bill (B9B-2009) recommended in a NCOP Committee on Security and Constitutional Development report circulated yesterday is one seeking to strengthen provisions in the Bill aimed at protecting the processing of the ‘special personal information’ of a child under exceptional circumstances. Bearing in mind that a child is any person under the age of 18, according to clause 26 of the Bill this includes information on alleged criminal activity as well as biometric data.

Full Legalbrief Policy Watch report

Measures to curb 'reckless lending' introduced: The draft National Credit Act Policy Review Framework and draft National Credit Amendment Bill gazetted yesterday for comment both propose measures for curbing 'reckless lending', reports Legalbrief Policy Watch. Among these is an amendment to the Act empowering the National Credit Tribunal to suspend 'certain reckless credit agreements'. Policy proposals for responsible lending include minimum standards for affordability assessment mechanisms, and full disclosure of the cost of credit to consumers in a format that is accessible and understandable. The draft policy review also calls for 'an all-inclusive approach when considering amendments to core aspects of the Act that relate to the financial situation of the consumer', especially provisions in section 3 regarding the non-preferential treatment of credit providers. It refers in particular to garnishee and administration orders.
Full Legalbrief Policy Watch report

Second credit amnesty briefing in NCOP: The Department of Trade and Industry (DTI) and the National Credit Regulator (NCR) will today brief members of the National Council of Provinces (NCOP) Committee on Trade and International Relations on research they have been conducting regarding a possible second credit information amnesty, writes Pam Saxby for Legalbrief Policy Watch. This follows a briefing in February on the consultative processes followed in pursuance of the DTI's credit information amnesty project.

Full Legalbrief Police Watch report

New codes of conduct for credit providers and debt review counsellors: The National Credit Regulator (NCR) has published a new code of conduct for the credit industry, aimed at combating over-indebtedness, along with a new debt counsellors' code of conduct for debt review, notes Pam Saxby for Legalbrief Policy Watch. This follows a notice gazetted last November, announcing the NCR's intention to withdraw its approval of the codes of conduct in place at the time. While the new codes have not yet been gazetted, they appear to have become effective on 1 May.

Full Legalbrief Police Watch report

Voluntary ombud scheme proposed for consumer goods and services industry: The National Consumer Commission has invited comment by 31 May on a draft voluntary ombudsman scheme and industry code for guiding alternative dispute resolution in the consumer goods and services industry, notes Pam Saxby for Legalbrief Policy Watch.

Full Legalbrief Police Watch report

A new consumer goods ombud

The Consumer Goods Council of South Africa has announced the appointment of a new Consumer Goods and Services Ombud (the CGS Ombud). Advocate Neville Melville. He was previously the Banking Ombud. He is probably best known in the CPA field as the author of The Consumer Protection Act Made Easy and the co-author of Know your Consumer Rights.

As required by the Consumer Protection Act, the Minister of Trade and Industry published a draft code of conduct and ombudsman scheme for comment on 9 May 2013. The time for comments has since passed, but the code and scheme have not yet been accredited. Once accredited, the CGS ombud will become the first port of call for the consumers to whom it applies. This means that the beleaguered National Consumer Commission will be able to refer certain complaints to it or the consumer (or for that matter the supplier) will be able to refer a dispute to it before approaching the NCC first.

To which products, services or suppliers will this code apply? Put differently, when will a consumer be able to approach this ombud? It is envisaged that the CGS Ombud scheme will be voluntary which means that it will only be enforceable against suppliers who have subscribed. The ‘application’ section of the code (see section 4) provides that:

4.1 The Code applies to all suppliers in the consumer goods and services industry, including but not limited to, retailers, suppliers, wholesalers, distributors, manufacturers, producers, importers, intermediaries, logistics and supply chain agents, unless they are regulated elsewhere by a Code prescribed by the Minister in terms of Section 82 of the Act and/or where a complaint falls within the jurisdiction of an ombud with jurisdiction, as defined in Section 1 of the Act, or an industry ombud accredited in terms of Section 82(6) of the Act.

4.2 This Code will apply to all the suppliers/subscribers in the consumer goods and services industry who produce/supply and/or provide services relating to but not limited to the following products (including the packaging of these goods): food, tobacco and beverages, pet food and pet products, electrical appliances, electronic goods, general merchandise, which includes tools, DIY, sport goods, home-care products, furniture, textiles, building materials, hardware supplies, jewellery, cosmetics, toiletries and fragrances, as well as toys and stationery…

A detailed list of the ‘sector industry categories’ is attached as Schedule 1 to the code, but it is clear that its application extends to most previously unregulated (at least from a consumer protection point of view) industries. The CGS Ombud scheme will also deal with issues relating to the labelling of products. This will become particularly interesting if the Advertising Standards Association also becomes accredited (it’s code and scheme was published on 22 March 2013).

  • However, remember that the CGS Ombud scheme will only apply to suppliers who have (voluntarily) subscribed to it. This raises the question why a supplier should get accredited? The more cynical among us will feel that it is better to be subject to the NCC who (at least at the moment) is not particularly efficient when it comes to handling individual complaints by consumers. I can think of a couple of reasons to subscribe:

  • Here the idiom ‘better the devil you know’ holds true. It is likely that the CGS Ombud will be more consistent in its application of the CPA, which will provide certainty to both suppliers and consumers.

  • Resolving complaints in an expedient and fair way keeps consumers happy and stops complaints from escalating to court actions. This saves both money (think legal costs) and harm to the supplier’s reputation.

The Consumer Goods and Services Ombud and the appointment of Adv Melville is to be welcomed as his expertise in setting up ombud schemes and in the CPA is significant. In recent months the NCC has turned over a new leaf and demonstrated that it can use the carrot rather than the stick which was favoured by the previous Commissioner by negotiating with big business, but it still lacks the capacity to deal with individual complaints from consumers. As Adv Melville points out:

It is the aim of the CGSO to relieve the pressure currently being experienced by the National Consumer Commission, thereby freeing it up to focus on its regulatory mandate, as is envisaged in the Consumer Protection Act 68 of 2008 (CPA).

[Note from the editor: As soon as the code of conduct is accredited we will publish a short analysis of its provisions, particularly where it departs from the CPA.]

Intro to PoPI (part 5): Rethinking privacy policies

When I was drafting this edition of the CLR, the Select Committee of the National Council of Provinces had just issued a report on 12 June 2013 in which the Protection of Personal Information Bill was accepted and tabled in the NCOP with some minor, mostly cosmetic, changes. Pam Saxby for Legalbrief Policy Watch explains what happens next:

If they're approved, they go back to the National Assembly for endorsement. If the NA agrees with the amendments proposed, the Bill is referred to the President for assent. At this point, it may be signed immediately into law, or simply assented to and signed into law later by notice in the Government Gazette. If the NA rejects the amendments, the Bill is sent to a 'mediation committee' comprising members of both houses or their relevant committees.

Increasingly, I find it very difficult to see the point of overly legalistic privacy policies normally hidden behind a tiny link at the bottom of a webpage. The reason for this increased concern is of course the Protection of Personal Information Bill and the duties which it places on businesses who use (or for that matter just collect or store) personal information.

The Bill does not provide much direct guidance on the content of privacy policies per se. However, many of the Bill's obligations such as informing the consumer that personal information is being collected and the purpose for which personal information is required. This means that the emphasis is moving away from indemnifying the business to being transparent and keeping consumers informed.

What is clear already is that the Bill will occasion a rethink of the way in which privacy policies are written. Luckily, we are not the first and we are not alone. The UK's Information Commissioner's Office (ICO) has issued a code of practice on privacy notices which would be an incredibly good place to start and provides examples of good (and bad) privacy notices. Bearing in mind that PoPI resembles the UK Data Protection Act, 1998 this may prove to be a valuable source moving forward.

I was recently confronted with a change in the privacy policy of Linkedin. This is probably the best and most innovative privacy policy (employing multi-media and graphic design elements in a legal document - who would have thought!) that has crossed my path recently. Making use of a pop-up in order to communicate that there has been a change in the policy on a particular date is also something that South African companies (who will all have to change their policies) may want to consider.

One could probably write a book on tips for new privacy policies, but here are some tips:

  • It must be in plain language and it must be visible. PoPI emphasises the fact that the processing of personal information must be transparent and that data subjects must be informed of how and why their personal information is being processed.

  • The privacy policy should at least include information on what information is collected, how (and why) it is used and the data subjects’ rights in relation to their records.

  • If the aim of the policy is actually to get the consumer’s consent for something (for instance direct marketing which in many cases will be required) extra care should be taken with the phrasing of the request. Remember that valid consent in terms of PoPI must be ‘voluntary, specific and informed expression of will’.

  • Remember that treating personal information responsibly and ethically could be a selling point for your company. Use your privacy policy as a tool to inform your clients of the fact that you treat their personal information with care and respect.

[As an aside: On 13 May 2013 the ICO indicated that it would be examining 250 privacy policies to establish whether they are in plain language and whether they clearly indicate how personal information will be handled.]

National Credit Act Amendment Bill

By Paul Esselaar (a partner at Esselaar Attorneys (

The National Credit Regulator (NCR) has for some time complained that the method used by credit providers to assess consumers’ ability to afford credit (affordability assessments) is problematic and unstandardised. Their solution to this was to issue – with very little fanfare and little if any public consultation – the ‘Credit Industry Code of Conduct to Combat Over-Indebtedness in terms of section 48(1)(b) of the National Credit Act’. Within this Code it sets out fairly specifically what is required in order to conduct a valid affordability assessment. One of the more salient points that does not necessarily stand out on the first reading is the requirement to ‘collaborate with registered credit bureaux to ensure additional datasets are made available to credit bureaux for use by credit providers in affordability assessments’. In short it provides credit providers with more work. What it also does is augment the information collected by the credit bureaux and, in s 2.1.6, allows the NCR to issue guidelines as to how to conduct affordability assessments.

Well and good. However, in terms of s 82 of the NCA as it currently stands, the mechanisms of the affordability assessments are at the discretion of the credit provider with an option for the NCR to contest a particular credit provider’s affordability assessment before the National Credit Tribunal. As the NCA takes precedence over the Code of Conduct it can be reasonably assumed that credit providers retain the discretion to abide by the guidelines or not.

Enter the National Credit Act Amendment Bill which was gazetted on the 29th May 2013. In a slightly obscure way the Amendment Bill seeks to make the make the Code of Conduct mandatory rather than optional. It does this by including (in the amendment to s 48) compliance with the guideline as one of the criteria for whether a credit provider’s registration will be approved (or more pertinently, disapproved).

While credit providers may be rightly concerned about the impact this may have on their credit provision process (not only in terms of the actual process but also in terms of the cost), credit bureaux must be most excited about legislation that will force credit providers to buy more of their credit reports. It’s time to buy shares in Transunion.

Plain language tips

Try to use the active voice as much as possible

There are many reasons why the active voice is generally (not always) preferable to the passive voice. Most importantly the active voice tends to improve the readability of a sentence because the verb appears earlier in the sentence. This is particularly important in the case of contracts, because the duty to do something (or not to do something) is actually what the contract is about.

Here is a simple example from the Oxford guide to plain language by Martin Cutts. The passive verbs are underlined. First, the passive voice:

Benefits from contributions invested in the With-Profits Fund are not guaranteed and are dependent on the bonuses declared by us.  

The active voice:

We can’t guarantee the benefits you’ll get from contributions we’ve invested on your behalf in the With-Profits Fund. These benefits will depend on the bonuses we declare.

A strange thing happened. Not only is the fact that there is no guarantee emphasised, but the supplier sounds friendlier too.

The easiest way to ensure that you are writing in the active voice is to place the person or thing ‘doing’ something before the verb.

© Elizabeth de Stadler and the Unit for Document Design at the Stellenbosch University Language Centre




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