What Con­sumer Pro­tec­tion Act should pro­tect

Business Day - Business Law and Tax Review - - BUSINESS LAW & TAX REVIEW - Patrick Bracher

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.

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