Complying with Changes in Legislation

Debt counselling

If a Debt Counsellor is of the view that a consumer is over-indebted he can propose a restructuring to all credit providers of the consumer. However, should any of the credit providers refuse to consent to such a restructuring, the debt counsellor will have to make one or more of the following recommendations to the Magistrates’ Court, concerning the obligations of the consumer:

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  That the period of the consumer agreement should be extended and the monthly payments be reduced;
  
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  That certain payments be postponed;
  
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  The recalculation of the consumer’s obligations in cases of the charging of unlawful fees;
  
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  Suspension of obligations under any reckless agreement
  

There are four points of entry for a consumer to enter the debt review process, namely:

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  A referral by court
  
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  A referral by the National Credit Regulator
  
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  A referral by a credit provider or
  
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  A voluntary application by a consumer;
  
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  Section 129 of the Act prescribes if a consumer is in default of payment, the credit provider can bring the default to the attention of the consumer and advise him that he can refer the matter to a debt counsellor.

  A credit provider is allowed to proceed with legal action if:

  
  
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  The consumer fails to respond to the notice of the creditor; or
  
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  The consumer refuses the advice of the creditor and does not refer the matter to a debt counsellor.

  All credit agreements are subject to the debt review process. The only exception is if the credit provider has proceeded with legal action against the consumer in terms of section 129 of the Act.

  
  
  
  

Consumer Protection Act

Purpose of the Act

The primary purpose of the Act is to protect consumers against exploitation and unfair practices by unscrupulous businesses, and to empower consumers to make wise purchasing decisions. The Preamble to the Act briefly summarises the ambit of the Act to have the following desired results:

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  To promote a fair, accessible and sustainable marketplace for consumer products and services by setting national norms and standards relating to consumer protection.
  
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  To provide for the improved standards of consumer information.
  
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  To prohibit certain unfair marketing and business practices.
  
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  To promote responsible consumer behaviour.
  
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  To harmonise laws relating to consumer protection.
  
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  To provide a consistent enforcement framework.
  
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  To establish a National Consumer Commission.
  

Background

Parts of the CPA have already come into effect. These sections are, for the most part, administrative in nature and do not really convey any rights, the bulk of the CPA is only due to come into effect on 24 October 2010. When the remainder of the CPA comes into effect it will give consumers a huge amount of rights as well as several avenues to hold suppliers accountable.

The relevant provisions of the CPA that are now in force, relate to the following issues:



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  The definitions used in the Act;
  
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  The purpose, policy and application of the Act; an
  
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  The establishment and functions of the National Consumer Commission.
  

Application of the Act

The Act applies to every transaction involving the supply of goods and / or services in the ordinary course of business within the Republic of South Africa, to the promotion of such goods and services that could lead to such transactions and to the goods and services themselves after the transaction is completed.

The following arrangements are also regarded as transactions between the supplier and consumer:



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  Memberships of associations for example a club membership; and
  
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  Any franchise arrangement between the franchisor and a franchisee (regardless of whether the franchisee is above or below the threshold). The Act will apply to the relationship in all respects for the protection of the franchisee.

  In addition, the Act extends to a transaction irrespective of whether the supplier:

  
  
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  Resides or has its principal office within or outside the Republic;
  
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  Operates on a "for profit" basis or otherwise;
  
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  Is an individual, juristic person, partnership, trust, organ of state, an entity owned or directed by an organ of state, a person contracted or licensed by an organ of state to offer or supply any goods or services, or is a public–private partnership; or
  
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  Is required or licensed in terms of any public regulation to make the supply of the particular goods or services available to all or part of the Republic.
  

Meaning of transaction and consumer

The following are the elements of a consumer transaction:

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  It is an interaction or agreement to interact between a consumer and supplier in the ordinary course of the supplier’s business, including in terms of any public regulation;
  
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  There is an exchange of consideration; or
  
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  The interaction concerns the supply or potential supply of goods or services to or at the direction of the consumer.
  

The definition of a consumer is extended to the actual users of goods or services, regardless of who actually may have conducted a transaction or paid for the goods or services.

A consumer means:

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  A person to whom goods or services are marketed in the ordinary course of business;
  
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  A person who has entered into an agreement or transaction with a supplier;
  
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  A user of the goods or a recipient or beneficiary of the services; or
  
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  A franchisee in terms of a franchise agreement.
  

Goods:

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  Anything marketed for human consumption;
  
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  Any tangible or intangible product (e.g. music, photograph, literature, information, software code, licenses);
  
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  Legal interest in land or any other immovable property (this would include usufructs / bare dominiums); and
  
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  Gas, water and electricity services.
  

Services:

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  Any work or undertaking performed by one person for the direct or indirect benefit of another;
  
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  The provision of any education, information, advice or consultation (excluding FAIS);
  
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  Any banking services or related financial services;
  
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  The transportation of any individual or any goods;
  
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  The provision of any accommodation (e.g. restaurants and hotels);
  
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  The provision of any entertainment or similar intangible products (e.g. sale of tickets to a concert);
  
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  The provision or access to any electronic communications infrastructure (e.g. cell phones, 3G, hotspots);
  
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  The provision of access to an event;
  
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  The provision of access to any premises, activity or facility;
  
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  The provision of access to any premises or other property in terms of a lease;
  
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  The provision of a right of occupancy in connection with land or other immovable property; and
  
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  The rights of a franchisee in terms of a Franchise Agreement.
  

Supplier / service provider

Any person including a juristic person who markets, promotes or supplies goods or services, is a supplier, as well as any person who promotes, supplies or offers to supply any service.