The new Consumer Goods and Services Code: How will it affect you?

In 2013, the Office of the Consumer Goods and Services Ombud (CGSO) was set up as a voluntary organisation. Its main aims are to resolve disputes between consumers and suppliers and to set a minimum standard of conduct by suppliers when dealing with consumers.

A draft Sector Code (the Consumer Goods and Services Sector Code of Conduct) in terms of the Consumer Protection Act (CPA) has been published and is awaiting the signature of the Minister. This means that all applicable organisations will be required to register with the CGSO and be subject to the requirements of the Sector Code.

This will have a considerable impact on affected businesses, which will need to urgently prepare for the Sector Code. It is expected to become law early in 2015.

These industries will be subject to the Code

  • Food, beverages and tobacco
  • Pet food and pet products
  • Electrical appliances
  • Tools, DIY, sports goods, furniture and textiles
  • Toys
  • Stationery
  • Building materials and hardware suppliers
  • Jewelry, cosmetics, toiletries and fragrances
  • Clothing and footwear
  • LP gas

This is a pretty broad spectrum.
What will you be required to do?

If you operate in one of the above sectors, you will need to set up an internal complaints-handling process which will have the following features –

  • Proper records must be kept of all complaints. This includes the type of complaint, how it was resolved or why it was not resolved, remedies made available to the complainant, time taken to address and resolve the complaint. This data is to be used, inter alia, to highlight recurring complaints.
  • Relevant staff are to be trained to handle this process and to have knowledge of the Consumer Protection Act.
  • Signs are to be prominently displayed in business premises that the organisation is bound by the Sector Code with the logo of the Ombud’s office.

This will involve considerable time and resources to set up. It will also add to your cost as this new structure in your business will need to be funded (see below).
The CGSO – purpose, powers and funding

In addition to the aims set out above, the Ombud may resolve disputes by voluntary dispute resolution. A court or tribunal will need to ratify any findings by the Ombud.

The Ombud is to be funded by the industry – the Office of the Ombud has published the schedule of fees as set out below:

A1_B2

There is also provision for special levies if the CGSO needs additional funding.

Although the aim of the Code is admirable – to improve the rights of consumers and bring certainty to how to deal with complaints – the Code will impose costs on, and require time commitment from, affected businesses. This will be especially harsh for small businesses.

This article is a general information sheet and should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.

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