The Consumer Protection Bill Presentation to the Portfolio Committee on Trade and Industry 3 September 2008 Ref No 42845

2 Introduction ■ Consumer Protection Bill is an overarching law, which provides a framework for consumer protection and addresses gaps in the current patchwork of laws – therefore a major law with significant implications for industry. ■ Commend dti for the extensive consultation on the Bill. ■ Many initial concerns addressed in the processes, with a few technical and substantive issues remaining (detailed in our submission). ■ However, in the last draft of the Bill, certain exclusions (FAIS, insurance) were introduced and some were removed (credit) - at the heart of the Banking industry’s concern and a matter requiring urgent attention.

3 Consumer Protection in Financial Services ■ 2 major laws promoting consumer protection in financial services (in addition to elements in sector laws e.g. insurance): ■ FAIS Act ■ National Credit Act. ■ They provide extensive protection for consumers. ■ However, CPB only partially excludes transactions subject to FAIS Act and no transactions subject to the NCA. ■ The NCA provides more consumer protection than insurance laws. It is inconsistent to take into account insurance specific sector laws whilst not providing for credit laws in a similar vein

4 The FAIS Act ■ CPB current provides partial exclusion for FAIS Act ■ Definition of service excludes “advice that is subject to regulation in terms of the Financial Advisory and Intermediary Services Act, 2002”. ■ FAIS Act regulates not only advice, but also intermediary services. ■ Partial exclusion requires industry to assess which elements of FAIS are excluded, which causes significant uncertainty. ■ Recommended that all services regulated in terms of FAIS Act should be excluded.

5 National Credit Act ■ Currently no exclusion for NCA, although NCA was excluded from the first public drafts of the Bill. Therefore: ■ NCR will need to apply for exemption from specific clauses from Minister of Trade and Industry. ■ No timeframes provided for processing of applications and risk that industry would not be ready when Bill is implemented as exemption not processed. ■ When exclusion for NCA was removed, the Bill was not reviewed to ensure consistency – as a result, in a number of provisions there is conflict between NCA and CPB.

6 National Credit Act ■ The Banking Association SA has performed a detailed comparison of the NCR and the CPB to establish the extent of overlap between the two laws (following slides illustrate the extent to duplication and gaps). ■ Recommended that NCA should be excluded from ambit of Consumer Protection Bill with consequential amendments to NCA to address 3 gaps: ■ Section 12: Regulation of time for contacting consumers ■ Section 35: Customer loyalty programs ■ Section 41: False, misleading or deceptive representations ■ Section 49: Notice required for certain terms and conditions.

7 National Credit Act Section of the CBP applicable to credit Section of the NCAComment Section 8Section 61Duplication Section 11Section 75Duplication Section 12NoneConsequential amendment to NCA Section 13Section 106Duplication Section 14Section 122Duplication and conflict Section 16Section 121Duplication Section 20Section 121Duplication and conflict Section 21Section 119Duplication Section 22Section 64Duplication Section 26Section Duplication Section 27Section 163Duplication Section 28Section 163Duplication

8 National Credit Act Section of the CBP applicable to credit Section of the NCAComment Section 29Section 76Duplication Section 31 Duplication and conflict Section 35NoneConsequential amendment to NCA or otherwise exclusion should not apply Section 39Section 89Duplication Section 40SectionDuplication Section 41NoneConsequential amendment to NCA Section 48Section 90Duplication Section 49NoneConsequential amendment to NCA Section 50Section 93Duplication Section 51Section 89-90Duplication Section 52Section 89-90Duplication

9 Recommendations ■ It is proposed that subsection (c) of Section (1) of the definition of “service” should be rephrased as follows: ■ "(c) any banking services, or related or similar financial services, or the undertaking, underwriting or assumption of any risk by one person on behalf of another except to the extent that any such service is regulated in terms of the Financial Advisors and Intermediary Services Act, 2002 (Act. No. 37 of 2002), the Long-term Insurance Act, 1998 (Act No. 52 of 1998), the Short-term Insurance Act, 1998 (Act No. 53 of 1998) and the National Credit Act, 2005 (Act No. 34 of 2005).” ■ Consequential amendments to NCA to accommodate sections 12, 41 and 49.

10 Thank you