Brands and businesses shouldn’t fear the Consumer Protection Act. Instead they should welcome its drive to promote fairness, openness and good business practices among suppliers of goods and services and consumers. Should your brand or business be faced with a consumer complaint, the CGSO is here to assist by providing an alternative dispute resolution service.
The Consumer Goods and Services Ombud (CGSO) is established and accredited in terms of section 82(6) of the Consumer Protection Act. This Act empowers the Minster of Trade and Industry to approve and promulgate an Industry Code of Conduct, which allows industry to manage its own disputes instead of allowing each and every complaint to be investigated by the National Consumer Commission.
The Consumer Goods and Services Industry Code of Conduct was promulgated by the
Minister of Trade and Industry on 29 April 2015. As a result, it is compulsory for all qualifying businesses to comply with the Code through signing up to the CGSO, paying the participation fees and complying with the dispute resolution process outlined in the Code and the CPA.
The CGSO began operating in March 2013 after initially being set up by the Consumer Goods Council of South Africa. It has evolved into a fully independent entity whose role is to provide an alternative dispute resolution service as provided for in section 70 of the Consumer Protection Act.
‘Since our mandate became formalised in April 2015, we have fielded more than 61 000 calls, opened some 19 410 complaints and closed more than 18 000,’ says Katlego Lehabe, business development manager at the CGSO. ‘The office does not have powers to make binding decisions. If parties to a dispute fail to reach a settlement or disagree with our recommendations, a complainant has the right to lodge a complaint with the National Consumer Commission (NCC). The NCC can then conduct a formal investigation and if warranted, refer the case to the National Consumer Tribunal (NCT). The NCT has the power to levy administrative penalties of up to 10 per cent of annual turnover or make any other appropriate order for refunds etc.’
The CGSO is governed by a board of directors comprising industry, consumer body and independent representatives. It is funded through levies and fees, which the CGSO is empowered to charge in terms of its Code. Although the board consists of industry representatives, they play no role in the adjudication of complaints.
This ensures complaints are managed independently without the influence of industry. The CGSO has to report to the Department of Trade and Industry and the NCC on complaints received, trends and non-cooperative suppliers.
What does the CGSO do?
‘We receive and assist in resolving complaints by consumers against members (participants) of the Consumer Goods and Services Industry in terms of the Consumer Protection Act (CPA) and enforce the Industry Code of Conduct. Participants can also refer difficult cases to the Ombud instead of litigating,’ Lehabe comments.
If you’re unsure of who the Code applies to, Lehabe says it applies to all retailers, suppliers, wholesalers, distributors, manufactures, producers, importers, intermediaries, logistics and supply chain agents in the FMCG industry, unless regulated elsewhere by public regulation or a Code of Conduct accredited in terms of section 82 of the CPA. Currently the only other accredited Code is the Motor Industry Code of Conduct.
Benefits and participation
‘The CGSO receives and deals with complaints and disputes by a consumer relating to the Code or CPA. It facilitates unbiased, quick and effective dispute resolution between consumers (at no charge) and industry in terms of CPA (and part of the value chain)’ he adds.
While the Code guides industry to minimum standards when engaging with consumers (private judge); the CGSO collects industry data – causes, systematic and recurring problems – and makes recommendations. The CGSO is equipped to resolve difficult complaints and reduce the administrative burden (time, effort and costs) of its members. It takes restorative, not punitive action against a business in the form of non-compliance notices or fines). It also identifies ways of increasing CPA compliance as an extension of internal resolution processes and works to educate the FMCG value chain on the Code and the CGSO.
But what happens if you refuse to participate in the CGSO scheme? Lehabe says you will be in contravention of section 82(8) of the Consumer Protection Act ) and might be liable for an administrative fine and other punitive measures should the NCC investigate your company and refer the matter to the National Consumer Tribunal.
What are the costs involved?
The CGSO scheme is a mandatory one that consumer goods and services companies are obligated to register with and contribute towards the running costs of the ombud.
In terms of the CGCSI Code, participants shall contribute to the funding of the operations of the CGSO by means of the payment of a joining fee and an annual levy and (if necessary) a special levy, determined from time to time by the CGSO.
To avoid the reputational and regulatory risk that results from not handling customer complaints well, brands and business should register as participants of the Consumer Goods and Services Ombud Scheme, to become Code and CPA compliant.
You’ll be joining more than 700 companies already on the Consumer Goods and Services Ombud’s list of registered participants.