RSM South Africa

The Consumer Goods and Services Ombudsman: How it affects you

The Consumer Protection Act makes provision for a Consumer Goods and Services Ombudsman to deal with complaints by consumers. In March 2013 this body was formed and a compulsory code of conduct was signed by the Minister. For business, this adds a further statutory requirement to comply with, as the code is enforceable by law, and non-compliance will result in a breach of section 82(8) of the Consumer Protection Act.

Previously, many businesses were not brought to book for consumer complaints relating to unfair business dealings and deceptive and/or fraudulent practices. The previous setting was an optional one, where business could choose to comply or not, thus many customer grievances were ignored or no follow up was done to resolve the disputes between consumers and suppliers. The good news for the consumer is that a new avenue for dispute resolution has been created with the accreditation of the Ombudsman.

The function of the Ombudsman will be to resolve complaints by consumers against suppliers (referred to as “participants”) and enforce the Industry Code of Conduct.

The Consumer Protection Act defines a supplier as any person who markets goods and services in the ordinary course of their business, this includes government and large municipalities, businesses (companies, CC’s, sole proprietors etc), clubs, trade unions, associations and societies.  It does not apply to private sellers of homes and motor vehicles, but may apply to a landlord even if it is not their full time occupation.

How it could affect you, as our client, lies therein that the qualifying businesses/suppliers, as per the above definition, in the goods and services industry that are not governed by other legislation will be obliged to register as members with the Ombudsman, and all registered members of the scheme are obliged to comply with the code of conduct of the scheme, as well as paying a joining fee and an annual levy at a group level, based on their annual turnover. The lowest group with turnover of less than a million Rand pays no annual fee and the highest group with turnover higher than R 3 billion pays annual membership of R250 000.  The requirements are enforceable by law and failure to comply may constitute a contravention of the Consumer Protection Act.

In the event of a complaint, the relevant customer, after taking the complaint up with the supplier, can lodge such unresolved complaint with the ombudsman, at no cost to the customer, the Ombudsman will give the supplier the opportunity to resolve the complaint; failing which the Ombudsman will help the parties to reach an agreed settlement. In the event that a dispute cannot be resolved by Ombudsman, such dispute can be referred to the National Consumer Commission. 

Please contact us for further information or assistance, or you can obtain more information from the Ombudsman website at www.cgso.org.za.

Henk Heymans  Thato Ntaoli
Audit Partner, Johannesburg         Trainee accountant, Johannesburg