What Consumer Protection Act should protect
The legislature has recognised that it is wholly inappropriate to try to regulate insurance companies in terms of a law which is particularly aimed at the supply of goods
THERE is no doubt that ordinary consumers of goods and services need protection because they are in an unequal bargaining position and they do not have the resources to pursue a claim against the suppliers of defective goods and services. But there are many goods and services which do not fit properly into the Consumer Protection Act or which already are, and should be, better regulated by particular sector regulators.
The original intention was that long-term and short-term insurers would be brought within the ambit of the Consumer Protection Act (CPA) unless insurance legislation is aligned with the Act by October 1 2012. The legislature has recognised that it is wholly inappropriate to try to regulate insurance companies in terms of a law which is particularly aimed at the supply of goods. The proper insurance regulator is the registrar of insurance. With everincreasing effectiveness the registrar has applied best international standards to treating policyholders fairly and the process is ongoing. For that reason there is a proposed amendment to financial services laws that will exclude the CPA and leave insurance to the insurance regulator.
We have already seen major exemptions relating to pension funds. Banks that have been exempted from provisions which would have made fixed deposits (a cornerstone of banking business) impossible to sustain. If an individual, investing part of his or her money, does a highly sophisticated derivative trade with a bank, is that a service that deserves the protection of a law made for different purposes? There is every reason why banks should be accountable to the registrar of banks, pension funds to the registrar of pension funds, medical schemes to the registrar of medical schemes and so on. If any of those pieces of legislation offer inadequate protection, that legislation should be improved. The National Consumer Commissioner has lost cases against all three cellphone service providers because of a clear misunderstanding of that industry which ICASA should be regulating from a specialist base.
With hindsight, there are things that should not have been included in the ambit of the CPA. The decision to include electricity as goods does not work at all. When are the goods supplied? Is it electron-by-electron, megawatt-by-megawatt, month-bymonth or what? Those who have said that property leases fall under the act have had to concede that the provisions in the act regarding fixed- term contracts make ridiculous inroads into the law of lease.
Think about immovable property. When a developer sells an interest in a development the goods sold are supposed to be usable and durable for a reasonable period of time. How long is that? Can the buyer come back after 10 years, 20 years or 30 years to complain that a roof tile has cracked? It is amusing to speculate whether a doctor who does a hip replacement is a service provider who has to warrant every new part installed during any repair. If it is a second transplant, the doctor may have to return the replaced hip to the consumer “in a reasonably clean container” unless the consumer declines the return of the replaced artificial hip.
Patrick Bracher is a director at Norton Rose SA.