Consumer Law Review August 2014

Published on: Sep 01, 2014

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August 2014

Dear Consumer Law Review recipient

This is the second part of our catch-up editions and this is a big one. In this edition we discuss some legislative developments in the consumer law arena. Do look out for the draft regulations on food labelling and marketing comments must be in by the end of this month. Companies who market food products to children must pay particular attention.

In September the International Consumer Law Conference will be held at the University of Pretoria. Dr Jacolien Barnard gives us a glimpse of the paper which she will be presenting on the role of vulnerability in determining whether a document is in plain language.

We have included the second part of Almo Lubowski’s article TCF versus FAIS: Are the two compatible?

Lastly, we look at whether PoPI applies retrospectively in the 10th part of our Introduction to PoPI series.

There have been numerous developments in credit law in the past months including the promulgation of the National Credit Amendment Act and the Draft National Credit Regulations for Affordability Assessment, the functions of the National Consumer Tribunal (NCT) and rules for the conduct of matters before the NCT. Our next edition will be devoted to developments in the credit industry. The affordability assessment guidelines will be particularly interesting in light of the African Bank problems and the recent compliance order issued by the National Credit Regulator against Capfin.

Happy reading!

Elizabeth de Stadler

Elizabeth de Stadler is the editor of the Consumer Law Review and a senior associate at Esselaar Attorneys in Long Street in Cape Town ( The firm specialises in consumer law. She is also a founding director of Novation Consulting ( or @NovConSA), a company which specialises in providing regulatory compliance solutions and designing innovative and effective ways to communicate ‘legal’ documents to consumers. 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.


- Consumer law in parliament

- In search of the ‘ordinary consumer’ and information in plain language in a multilingual, multicultural South Africa: Where does the vulnerable consumer fit in?

- TCF versus FAIS: Are the two compatible? – Part 2

- Intro to PoPI (part 10): Does PoPI apply retrospectively?

- Developments in the credit industry 


Consumer law in parliament

ICASA end-user and subscriber service charter regulations

ICASA published regulations which prescribe ‘minimum standards for services to end-users and subscribers’ of inter alia, ‘any service…which consists wholly or mainly of the conveyance by any means of electronic communications over an electronic communications network’ by Electronic Communications Network Service and Electronic Communications Service licensees for comment on 22 January 2014. The purpose of the regulations will be to -

(a) prescribe the minimum standards of service quality offered to end-users by licensees;
(b) make available information that will help end-users make informed choices on services offered by licensees and through the publication of service performance;
(c) inform end-users of their rights and obligations to enable them to exercise such;
(d) clarify processes that are intended to improve turnaround times for the resolution of end-user complaints and provide for timeous redress;
(e) provide for monitoring and enforcement of these regulations;
(f) provide for rebates to subscribers who did not receive services due to service unavailability; and
(g) provide for the publication of statistical complaints and network performance measurement reports received from licensees on the Authority’s website so as to allow end-users to make informed choices.

New labelling and marketing regulation for foodstuffs

The Department of Health recently published draft regulations and guidelines on the labelling and advertising of foods (R.429). While the regulations are predominantly aimed at labelling, marketers will have to pay attention as it is illegal to promote goods in a way which contains any information, claim, reference or declaration which is not authorized by the new regulations or which will mislead consumers. The provisions relating to commercial marketing of foods and non-alcoholic beverages to children will probably be the most controversial part of the regulations and guidelines. This part of the guideline is not only applicable to food manufacturers and sellers, but to anybody who promotes food to children. This includes television and radio stations, public relations and advertising agencies, schools etc. Foods which are considered unhealthy can no longer be advertised to children under the age of 12. Comments can be submitted until the end of August.

*Thank you to Legalbrief Policy Watch for providing us with this information.

In search of the ‘ordinary consumer’ and information in plain language, in a multilingual, multicultural South Africa: Where does the vulnerable consumer fit in?

by Dr J Barnard

Department of Mercantile Law, University of Pretoria

Although consumer protection is not a new concept in South African law, the Consumer Protection Act 68 of 2008 (the CPA) now provides for a much more comprehensive and encompassing mechanism to protect consumers. This is primarily done in three ways:

• protecting consumers not only during the provision of goods and services and the conclusion of contracts but also during the promotion and marketing of goods and services;
• providing special protection to a particular type of consumer - the vulnerable consumer. In terms of section 3(1)(b) of the CPA, vulnerable consumers include low-income, illiterate, young and elderly consumers and consumers from low-density populated areas. It also includes consumers whose ability to read and comprehend an advertisement or agreement is limited due to low literacy, vision impairment or difficulty with the language in which the advertisement or agreement is produced; and
• for the first time in the history of South African law the consumer is provided with eight core fundamental consumer rights one of which is the right to disclosure and information.

The focus of this article will be on the consumer’s fundamental right to disclosure and information. Section 22 of the CPA provides that a consumer has a right to information in plain and understandable language. It also provides the yardstick by which to assess whether or not information is in plain language. The test is whether or not ‘an ordinary consumer of the class of persons for whom the information is intended, with average literacy skills and minimal experience as a consumer’ could be expected to understand the information ‘without undue effort’.

Who should be regarded as an ‘ordinary consumer’ in a South African context? Providing a realistic answer is complicated by the fact that South Africa has eleven official languages and quite a large group of the population falls within the definition of a vulnerable consumer set out in section 3 of the CPA. What, therefore, is the role of the vulnerable consumer in assessing plain language in consumer agreements?

In an attempt to find an appropriate answer, the position in the United Kingdom can be assessed. This jurisdiction was chosen due to its historic links rooted in the common law of South Africa as a source of law, as well as the similar wording between the CPA and the relevant consumer legislation in the UK (the Unfair Terms in Consumer Contract Regulations 1999 and the Consumer Protection from Unfair Trading Regulations 2008 (CPUT), for example). It should be noted that, in the case of plain language, the EU Unfair Commercial Practices Directive deserves discussion as an introduction to the position in the UK due to the fact that the CPUT Regulations are an almost verbatim implementation of the above EU Directive.

Both the Directive as well as the CPUT Regulations provide tests and guidelines for the assessment of an ‘average consumer’ as well as a ‘vulnerable consumer’ in the trade practices conducted by a supplier. This is done in an attempt to determine whether or not the particular trade practice or term was fair. The average consumer is regarded as ‘reasonably well informed and reasonably observant and circumspect, taking into account social, cultural and linguistic factors’. These factors are important in any assessment of an ‘ordinary’ (average) consumer in a South African context. The Directive as well as CPUT Regulations also contain provisions aimed at preventing the exploitation of consumers whose characteristics make them particularly vulnerable to unfair commercial practices. This is done by assessing their ‘mental or physical infirmity’ (including sensory impairment, limited mobility and other disabilities), ‘age’ (such as minors or elderly persons); or ‘credulity’ (groups of consumers who may more readily believe specific claims). The fact that the CPA is a relatively new Act, introduces new legal concepts to South Africa law, and almost no case law is available, makes the consideration of ‘appropriate foreign and international law’ (section 2(2) of the CPA) of cardinal importance.

Section 22 has a much wider interpretational function than simply the determination of unfair trade practices or unfair terms and mentioned throughout the CPA. The international tests and guidelines as set out above provide a good starting point to assess the ‘vulnerable consumer’ within a certain group of ‘ordinary consumers’ taking into account factors such as ethnic origin, education and economic circumstances as well.

(This is an extract from a paper which will be presented at the University of Pretoria International Consumer Law Conference: 25 – 27 September 2014)

TCF versus FAIS: Are the two compatible? – Part 2

by Almo Lubowski CFP® FPSA®
LLB, PostGrad Dip Financial Planning, PostGrad Cert Social Security & Pensions

This is the second part of the comparison between the six Treating Customers Fairly (TCF) outcomes and how they compare with the Financial Advisory and Intermediary Services Act 37 of 2002 (FAIS). The aim of the comparison is to indicate that if the FAIS Act is being comprehensively applied in financial advisory practices as a framework for good business practice, there should be very little that needs to change to achieve the TCF outcomes. The first three outcomes were discussed in part 1 (

Outcome 4 – ‘Where customers receive advice, the advice is suitable and takes account of their circumstances.’

The FAIS General Code of Conduct for Financial Service Provider’s and Representatives (the Code) also requires that advice must be suitable. In terms of section 8 of the Code an advisor must

take reasonable steps to seek appropriate and available information from the client regarding the client's financial situation, financial product experience and objectives to enable the provider to provide the client with appropriate advice.

This information must be analysed in order to identify a product that will be appropriate for the client, taking his or her risk profile and financial needs into account.

Outcome 5 – ‘Customers are provided with products that perform as firms have led them to expect, and the associated service is both of an acceptable standard and what they have been led to expect.’

This outcome would point mainly to a responsibility that would be carried by financial services providers that are creating the products. However, it points back again to what information is given to the client and what was disclosed in this regard. The requirement that advice and products must be suitable would also play a significant role in meeting this outcome due to the fact that unsuitable products will certainly not perform in line with the specific needs that the client may have.

Outcome 6 – ‘Customers do not face unreasonable post-sale barriers to change product, switch provider, submit a claim or make a complaint.’

Again this outcome is aimed mainly at financial services providers. However, more often than not the customer’s link to the product supplier is the financial advisor and specifically if there is an agreement for on-going service between the parties, there would be an obligation to assist the customer when they need to deal with the financial services provider. This can be deduced from the fact that and advisor is obliged to give yearly information (at a minimum) to the customer on their product portfolio in terms of section 7 the Code. At that point there may well be a desire to cancel, switch or change aspects of the current portfolio and naturally the advisor or intermediary would need to assist with this.

If advisors comply with the principles and stringent requirements of the FAIS Act in substance and form, the outcomes of TFC will be achieved.

Intro to PoPI (part 10): Does PoPI apply retrospectively?

I read Russel Luck ‘PoPI – Is South Africa keeping up with international trends?’ (in the May 2014 of the De Rebus) that the Protection of Personal Information Act 4 of 2013 does not apply retrospectively. The statement is not wrong as it is consistent with the presumption that legislation does not apply retrospectively unless the statute itself indicates otherwise. PoPI does not provide for retrospective application. However, in the case of PoPI the effect of the presumption of prospectivity requires some investigation as I suspect that it will not make much of a difference given the ongoing nature of typical processing activities.

Normally, it is simple to separate activities the regulation of which would require retrospective application. So, if a ‘crime’ is committed before the effective date of the act which criminalises it, it will not be considered a ‘crime’. But what if the ‘crime’ in question is of an ongoing nature? In other words what if it starts before the effective date, but continues thereafter?

In the context of PoPI the question which is often asked, is whether PoPI applies to personal information that was collected before the Act came into effect? In other words, will PoPI only apply to information which came into the responsible party’s possession after the effective date? The answer to this question is ‘no’, because the date at which the information is collected is not the deciding question when ascertaining whether the Act applies or not. Rather, PoPI will apply to all processing that takes place after the effective date. The definition of ‘processing’ practically includes all activities from collection to storage to the destruction of the information.

This means that if a company is in possession of a database which it started to compile ten years ago, but no longer uses the entire database it will be subject to PoPI after the effective date even if the company is no longer doing anything with the data (remember that storing data is also a form of processing which means that the company must have a legitimate reason for doing so and must keep that information secure (amongst other things)). It also means that if it turns out that the company has no legitimate reason for having the information it will not be held liable for doing so for the period before the effective date, but that it will have to destroy the information in order to comply in future.

Another example is this: Many companies make use of other companies to process their personal information for them. These companies are called operators. This is acceptable as long as the company ensures (in terms of a written contract) that that operator complies with the security measures required by PoPI. Up until the effective date it will not be illegal for a company to outsource the processing of personal information without such contractual arrangements being made (although it is not wise). However, once PoPI comes into effect any existing contracts will have to be amended to include the arrangements.

In Russel Luck’s article (referred to in the first paragraph) he uses the example of the possibility that some companies may avail themselves of the opportunity to acquire databases before PoPI becomes effective so they may market to a broader base once PoPI comes into effect without having to comply with PoPI’s rules regarding the collection of personal information or its rules regarding direct marketing. This is true, but as Mr Luck points out, data subjects will be protected by their right to opt out of direct marketing in terms of section 69 as well as all of the other obligations placed on that company by PoPI.

So, retrospective or not, saying that a particular activity pre-dates PoPI will seldom (if ever) mean that PoPI will not apply. This in turn means that companies who start buying customer data in bulk in anticipation of PoPI coming into force may be left with more trouble than they bargained for.

Developments in the credit industry 

National Credit Amendment Act: The National Credit Amendment Bill became an act on 20 May 2014. It will only come into effect on a date to be published by the President.

Removal of adverse credit information: The Department of Trade and Industry published a notice about the removal of adverse consumer credit information and information relating to paid up judgments on 26 February 2014. It came into effect on 1 April 2014. The National Credit Amendment Act (referred to above) ensures that people who have paid their debts will automatically be removed from credit bureau records in future.

Draft National Credit Regulations for Affordability Assessment, the functions of the NCT and rules for the conduct of matters before the NCT: These regulations were published on 1 August 2014. Thirty days have been allowed for comments. This is significant credit providers as it can turn their business models on its head. Currently credit providers conduct their own affordability assessments based on in-house business decisions. The regulations will standardise this approach which may amount to a reduction in competition between credit providers as they are forced to follow an identical process. Affordability assessments have recently been in the spotlight due to the collapse of African Bank and compliance notices issued to certain credit providers relating their affordability assessments. 

These developments, as well as recent cases, will be discussed in the next edition of CLR.

*Thank you to Legalbrief Policy Watch for providing us with this information.

Plain Language Tip

Is it wrong to split the infinitive?

Split infinitives are a hotly debated issue amongst language professionals. Although the principle of not splitting the infinitive is not followed as strictly today as it once was, respected grammar guides suggest that the writers of formal texts should avoid splitting the infinitive unless the alternative would alter the meaning of the sentence or make for really clumsy reading.

However, some people in fact believe split infinitives are grammatically incorrect and should be avoided at all cost. It seems that this trend has its roots in Latin grammar where the infinitive cannot be split and that these people have decided that it should also be the case in English grammar – even though in English the infinitive can be split.

The most well-known example of the use of the split infinitive is probably the famous motto of the television series Star Trek – ‘to boldly go where no man has gone before’. In this case the infinitive is to go. The adverb boldly splits it by coming between the ‘to’ and the ‘go’.

When the use of plain language in terms of the Consumer Protection Act is your aim, you must consider the difference in meaning of a particular sentence when the infinitive is split compared to when it is not. ‘You really have to watch him’ (meaning that it is important that he should be watched) does not have quite the same meaning as ‘you have to really watch him’ (meaning that he should be watched very closely.)

(Source: Split infinitives. 2014. [Online]. Available: [2014, June 2].)

© Stellenbosch University Language Centre and Elizabeth de Stadler


Understanding the Consumer Protection Act
Consumer Protection Act 68 of 2008 & Rules and Regulations Rev. 6e
SAICA Companies Act 71 of 2008 and SAICA Regulations for the Companies Act 71 of 2008 (2-volume set)
SAICA Tax Administration Act 28 of 2011 & Related Material
McKenzie’s Law of Building and Engineering Contracts and Arbitration
Understanding Unemployment Insurance Law



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