Deneys Reitz: Consumer Protection Act in full force 31 March 2011

The implementation date of the full impact of the Consumer Protection Act has been deferred until 31 March 2011. This is an unsurprising development given that the draft regulations are only likely to be published for comment at the end of September and the Consumer Commission is yet to have a Commissioner. The Minister has conceded that additional time is required for adequate preparation of the administrative systems necessary to ensure the efficient and effective implementation of the Act.

The extension of time is required not only to set up the bodies that will enforce the Act, but will also allow for a proper consultative process on the draft regulations. There are many sections of the act that require fleshing out through regulations. Most importantly, everyone is waiting to find out what the financial turnover threshold is that will exclude companies from protection under the Consumer Protection Act as consumers (indications are that it will be R5 million).

Until the regulations are finalised, it is very difficult for suppliers to know exactly what to do in order to comply with the act and prepare for its implementation. The draft regulations have not yet been published and, given the number of stakeholders significantly affected by the far reaching provisions of this act, it seems likely that the comment process will take some time. In addition, almost all the regulations require input from the Consumer Commission which has not yet been fully established.

So what does this delay mean for businesses and consumers?

It will be frustrating for consumers who are looking forward to the many benefits that will result from the implementation of the Consumer Protection Act. These include improved service levels, fair dealing, the right to cancel fixed term agreements and freedom from unwanted marketing. However the delay is necessary to ensure that all the rights allowed to consumers can be enforced.

For suppliers, this means that they have a little more time to ensure that their houses are in order. The Consumer Protection Act will affect all areas of business and all suppliers (including importers, distributors, retailers and others in the supply chain) in South Africa. Returns policies, advertising, marketing contracts, standard terms and conditions, pricing policies, labeling, information retention, promotional competitions, franchises and business names and liability are just some of the areas that are radically affected by the provisions of the Consumer Protection Act. There is a lot that can be done even before the regulations are published.

It is essential that suppliers of all sizes review all their policies and contracts to make sure that they are in line with the requirements of the Consumer Protection Act and do not expose themselves to the significant risks resulting from non-compliance. For instance, more and more companies are beginning to require warranties from their suppliers that their products and services comply with the terms of the Consumer Protection Act in order to limit their risks. This is one more instance that should encourage companies to make the most of this time.