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Presentation to the Portfolio Committee on Trade and Industry, Parliament, Cape Town

Presentation to the Portfolio Committee on Trade and Industry, Parliament, Cape Town Wednesday 27 October 2010. Presenter: Hazel Devraj, CEO. The NCT: Introduction. Established by National Credit Act 34 of 2005 Mandate expanded in terms of the Consumer Protection Act

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Presentation to the Portfolio Committee on Trade and Industry, Parliament, Cape Town

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  1. Presentation to the Portfolio Committee on Trade and Industry,Parliament, Cape Town • Wednesday 27 October 2010 Presenter: Hazel Devraj, CEO 1

  2. The NCT: Introduction • Established by National Credit Act 34 of 2005 • Mandate expanded in terms of the Consumer Protection Act • The NCT fulfills its purpose by the fair and independent adjudication of matters filed. 2

  3. The NCT: Jurisdiction and functions Functions In terms of Section 27, the Tribunal or a member of the Tribunal acting alone or in accordance with the Act may adjudicate in relation to any: • Application brought before it and make any order provided for in the Act in respect of that application; • Allegation of prohibited practice by determining whether prohibited conduct has occurred and if so, by imposing a remedy provided for in the National Credit Act and, from 01 April 2011, in terms of the Consumer Protection Act. 3

  4. The NCT: Structure Structure • Adjudication • In September 2006, the President appointed sixteen independent non-executive Tribunal members. • Ms Diane Terblanche was appointed as Chairperson and also fulfills the role of Executive Chairperson • Operations • The adjudicative function is supported by a small staff complement. The structure comprises of 9 staff members, headed by the CEO/Registrar. • Governance • Chairperson assisted by Audit and Risk Committee and Chairperson’s Advisory committee 4

  5. Chairperson Operations CEO/ Registrar Adjudication Tribunal Members Office Administration Registry Unit Communications (Contract post) Finance Consultant (Outsourced) Corporate Services Unit Case Management Unit The NCT:Adjudication and operations 5

  6. The NCT: Governance structures 6

  7. Alignment with dti strategic goals dti strategic goal: Promoting broader participation, equity and redress in the economy 7

  8. The NCT: Broaderparticipation in the economy The NCT contributes by: • Freeing up / increasing funding in the economy for investment in the productive sector through its adjudication on prohibited conduct • For example: • Over-charging on interest rates, overpayment by credit receivers in SA, etc in terms of the National Credit Act. 8

  9. The NCT: Broaderparticipation in the economy (cont.) The NCT contributes by: • Freeing up / increasing resources in the economy for investment in the productive sector through its adjudication of prohibited conduct • For example: • Under-delivery on value for money, quality and safety of goods and services, etc, to SA consumers in terms of the Consumer Protection Act 9

  10. The NCT: Broaderparticipation in the economy (cont.) The NCT contributes by: • Availing / increasing funding (through the development of a fair and non-discriminatory credit provision) for productive / investment purposes through adjudicating on prohibited conduct • For example • The assessment criteria for advancing credit in SA, etc in terms of the National Credit Act. 10

  11. The NCT: Direct contribution to providing redress – dti goal The NCT contributes by: Providing redress to consumers • NCT has dealt with matters especially relating to the review of sale of goods and de-registrations of credit providers and debt counselors. Under the Review of Sale of Goods: two significant cases. • Mapeka vs Wesbank. • Dumas vs Motor Finance Corporation. 11

  12. The NCT: Direct contribution to providing redress – dti goal (cont.) The NCT contributes by: Providing redress to consumers The de-registration of debt counselors and credit providers have ensured that vulnerable consumers are protected against unscrupulous registrants. • Two debt counselors were de-registered • Two debt counselors and one credit provider given opportunity to review and revise their processes De-registration of Frabert t/a Cashwise- huge impact on lives of consumers. 12

  13. The NCT: Direct contribution to providing redress – dti goal (cont.) Providing redress to consumers • The Tribunal has received an increase of 11250% with regard to the consent order applications received. • The confirming of a debt re-arrangement is that the parties can obtained certainty that the debt rearrangement will be complied with. • Consumers are not exposed to paying illegal interest rates or repayments that are more than what they should be paying over a period of time. 13

  14. High level performance results- Strategic Goal 1 Note: Details in Annual Report – Performance information Strategic goal 1 Performance result Case load increased by 1776% Targets as per Business plan 7 Introductory sessions held in provinces. 7 Circuit courts held 1. Profiling the Tribunal as an accessible adjudicator of consumer and credit matters Strategic KPI- 10% increase in the matters filed with the Tribunal. 14 14 14 14

  15. High level performance results- Strategic Goal 1 (cont.) Strategic goal 1 Performance result 82 Notices of completed filings and 9 judgments placed on the website Development of NCT video and distribution of video. 8 information pieces issued. 1. Profiling the Tribunal as an accessible adjudicator of consumer and credit matters 15

  16. High level performance results- Strategic Goal 1(cont.) Strategic goal 1 Performance output Direct interaction with vulnerable consumers through 3 rural events E-mail shots to registrants 1. Profiling the Tribunal as an accessible adjudicator of consumer and credit matters 16

  17. High level performance results- Strategic Goal 2 Strategic goal 2 Performance output Policy inputs on amendment to Rules aligned to issues experienced with filings. 1776% increase in case load and 11250% increase in consent orders Targets as per business plan Reasoned decisions and orders distributed on all matters (12 cases) • Contribute to the development of a rights culture STRATEGIC KPI: • 100% Policy inputs aligned to market trends and cases received. • 5% increase in matters filed based on information pieces issued. 17

  18. High level performance results- Strategic Goal 2 (cont.) Strategic goal 2 Performance output Research on efficacy of the Act from analysis of cases (2 papers) Two research papers on procedural and substantive issues. • Contribute to the development of a rights culture STRATEGIC KPI: • 100% Policy inputs aligned to market trends and cases received. • 5% increase in matters filed based on information pieces issued. 18

  19. High level performance results- Strategic Goal 3 Strategic goal 3 Performance output Constant engagement with provincial offices and building of capacity to handle NCA matters. Target as per business plan:- 6 Joint educational programmes held with Consumer Affairs Offices. Research conducted on adjudicative entities • Ensuring a consistent and coherent application of the National Credit Act and the Consumer Protection Act STRATEGIC KPI 1 provincial office with consistent processes with that of the NCT 19

  20. High level performance results- Strategic Goal 4 Strategic goal 4 Performance output 0% of the decisions overturned on review or appeal. 1 matter taken on appeal. Targets as per business plan:- 4 workshops for members of the Tribunal to enhance their capacity to adjudicate on cases Exposure to international standards Nine reference papers developed from case analyses • Positioning the Tribunal as an authoritative adjudicator of consumer and credit matters STRATEGIC KPI • 2% of the decisions overturned on review or appeal 20

  21. High level performance results- Strategic Goal 5 Strategic goal 5 Performance output Tribunal received additional funding during MTEF. ( 2 million- 10%) Targets as per business plan Two meetings/workshops and submissions made to the dti Benchmark report on resource requirements of similar institutions • Resourcing the Tribunal to fulfill its mandate STRATEGIC KPI:- 10% increase in the funding of the Tribunal 21

  22. High level performance results- Strategic Goal 6 Strategic goal 6 Performance output 100% (181) cases adjudicated on where pleadings/filings closed Targets as per the business plan:- 159 consent orders/interim relief matters set down within 2 weeks of close of pleadings; 11 cases set down within 4 weeks of close of pleadings for other matters • Adjudicating on matters before the Tribunal to fulfill its mandate STRATEGIC KPI:- 100% of cases adjudicated on 22

  23. High level performance results- Strategic Goal 6 (cont.) Strategic goal 6 6. Adjudicating on matters before the Tribunal to fulfill its mandate 23

  24. Setting precedent Through the adjudicative process and the decisions reached by the NCT, precedent is set. • De-registrations of debt counselors- 2 judgments issued. • Application to demand the delivery of statements. Decision that this is a right of consumers and not companies. 24

  25. Setting precedent (cont.) • Consent orders – illegal interest rates, ability of consumer to repay debt reasons for consent orders not being confirmed- judgment issued. • Review of sale of goods. Judgment issued in terms of termination processes in surrendering goods. • Determination provided in terms of the jurisdiction of the Tribunal on a matter regarding failed ADR. 25

  26. Challenges, steps taken 26

  27. Challenges, steps taken (cont.) 27

  28. Challenges, steps taken (cont.) 28

  29. Achievements • 85% of business plan activities met. • Service Charter conference held with all stakeholders to develop a service charter. • Has obtained an unqualified opinion from inception (3 years). Great deal of emphasis has been placed on good corporate governance, development and implementation of policies, procedures and systems. • Judgments have created greater certainty through the setting of precedent. 29

  30. Achievements • Circuit court hearings have increased accessibility. • Interactive sessions with provincial offices will result in a more consistent regulatory framework. 30

  31. Financial performance • Total revenue : R 17, 749, 237 • Surplus from 2008/09 R 2, 671, 860 • Total expenditure: R 18, 118, 535 • Surplus for 2009/10 R 2, 302, 562

  32. Financial performance (cont.) • Budget has been well managed. • No irregular and wasteful expenditure 32

  33. Financial performance (cont.) • Surplus due to: • Submission for adjustment of members fees awaiting approval; • Finalisation of outstanding projects relating to economic research and website development; • Larger groups of stakeholders were expected at provincial sessions, than budgeted for. 33

  34. Financial performance (cont.) • Significant changes in expenditure trends: • Staffing costs: More staff appointed on establishment at a point in time. Additional staff brought in to assist with projects and HR matters. • Consultant costs: Limited structure requires additional resources to revise policies, facilitate strategic, business planning and risk workshops, development and testing of Disaster Recovery and Business Continuity. 34

  35. Financial performance (cont.) • Significant changes in expenditure trends: • Travel and subsistence: Travel for hearings as a result of increase in cases. International benchmarking. • Compliance costs: Scope of audits due to critical risks facing the organisation. Involvement of Audit and Risk Committee. PFMA requirements applicable to small entities. 35

  36. 2010 AGSA Audit Report Valuable lessons learnt from immediate past audit regarding performance information. Findings • Reported indicators not accurate when compared to source information. • Performance information systems not appropriate. 36

  37. 2010 AGSA Audit Report • The NCT developed, implemented and started with a rigorous process of collating and verifying performance information from early 2009. • Information collated in a consistent manner, -issue was on terminology and the manner in which it was interpreted differently by the AG.

  38. 2010 AGSA Audit Report • KPI’s need to be defined. As the NCT is a legal entity, definitions will need to be provided for terminology utilised so that there is a common understanding. • Review of strategic and business plans thus undertaken. Too many objectives and detailed to operational plan. 38

  39. Conclusion • NCT looks forward to implementation of Consumer Protection Act • New legislation gives rise to interpretative challenges • Nevertheless, NCT is confident it will be ready and able to competently adjudicate on CPA • Hard at work to ensure that appropriate funding and structures are in place to deal with any challenges

  40. Thank you Ms Hazel Devraj CEO, National Consumer Tribunal 40

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