PRESENTATION TO THE PARLIAMENTARY PORTFOLIO COMMITTEE: TRADE AND INDUSTRY ANNUAL REPORT 2013-14

1. PRESENTATION TO THE PARLIAMENTARY PORTFOLIO COMMITTEE: TRADE AND INDUSTRY ANNUAL REPORT 2013-14 FIRST QUARTER REPORT 2014-15 NATIONAL CONSUMER COMMISSION 16 SEPTEMBER 2014 Mr EBRAHIM MOHAMED COMMISSIONER

2. OUTLINE OF PRESENTATION • Overview of annual report • Strategic objectives • Achievements against planned targets • Financial management • Key challenges and financial projection

3. KEY HIGHLIGHTS FY 2013/14

4. KEY HIGHLIGHTS • NCC received an unqualified opinion; • Investigation into meat labelling; • Led to meat labelling regulations being promulgated by Minister. Other recommendations being followed up; • Horse meat investigation conducted • Investigation into the timeshare industry • Complaints backlog dealt with. (Assisted by Alternate Dispute Resolution Agents within key industries); • The NCC and the National Consumer Tribunal hosted its first consumer protection summit.

5. KEY HIGHLIGHTS • Hosted seventeen workshops targeting women, people living with disabilities, SMMEs and community members in Gauteng, KZN, Free State and Western Cape; • 20 product recall notifications issued; • Participated in the revising of the United Nations Guidelines on Consumer Protection; • Secured returns, refunds and replacements for consumers; • Motor industry code submitted for accreditation.

6. Regulatory Context

7. Regulatory Context • the dti is the custodian of Consumer Protection policy; • NCC is established in terms of Section 85 of the Consumer Protection Act (CPA); • Jurisdiction throughout the Republic of South Africa. • Core responsibility is to enforce and carry out the functions assigned to it in terms of the CPA. • The CPA seeks to promote a fair, accessible and sustainable marketplace for consumer products and services and for that purpose to establish national norms and standards relating to consumer protection.

8. Regulatory Context • It further seeks to provide for improved standards of consumer information, to prohibit certain unfair marketing and business practices, to promote responsible consumer behaviour and to promote a consistent legislative and enforcement framework relating to consumer transactions and agreements; • NCC has concurrent jurisdiction on Consumer Protection in RSA- jurisdiction is shared with Provincial Consumer Protection Authorities.

9. Strategic Objectives

10. STRATEGIC OBJECTIVES The following are the revised strategic objectives : Strategic Objective 1 • To promote compliance with the Consumer Protection Act Strategic Objective 2 • To be a well governed and capacitated organisation • NCC has the following divisions in order to give effect to the strategic objectives • Enforcement and Investigations • Advocacy, Education and Awareness • Research • Legal • Corporate Services

11. Achievement against Targets

12. Achievement against Targetsintroduction • 49 out of 72 officials, including managers, are involved in operations; • 12 measures/ indicators- 20 targets; • Fully achieved on 8 measures- 16 targets; • 4 targets not fully achieved- more than 50% achieved on 2 targets; • Plans put in place to ensure that targets are achieved in future; • Despite problematic beginning, NCC has stabilised; • NCC received a qualified audit in 2012/13 (prior year); • From a compliance perspective, NCC made tremendous progress on previously non-existent Internal Audit and Risk Management functions. • Strict internal control measures effected within the Finance Division and Supply Chain Management unit.

13. Achievement against Targets-introduction • Irregular expenditure is being managed effectively; • Irregular, fruitless and wasteful expenditure, deviation and invoice registers have been implemented as internal control measures; • The asset register and payment processes have been revised; • All 96 findings made by AGSA in the 2012/13 financial year have been dealt with and monitored; • To improve on service delivery, each Division has introduced standard operating procedures; • The Audit and Risk Committee has met several times in the course of the year and engaged in meaningful deliberations with NCC; • Irregular expenditure which stems from transactions entered into during 2011/12 and only discovered in 2012/13- continue to plague NCC- will be dealt with in financial report.

14. Achievement against Target

15. Achievement against Targets

16. Achievement against Targets

17. Achievement against Targets

18. Achievement against Targets

19. FINANCIAL MANAGEMENT

20. Linking performance withbudgets

21. Overview of Expenditure Summary: • The expenditure of R41,317m, if compared to the approved budget of R44,516m, reflects an underspending of R3,199m (7%). • Underspending was mainly on Goods and Services, where creditor invoices totalling R1,708m were only received and paid after financial year-end, whereas expenses relating to the lease of office space decreased following negotiations with the service provider to this effect.

22. Linking performance withbudgets

23. Linking performance withbudgets

24. Statement of Financial Performance 2013/14 year

25. AGSA Report Performance Information: • No material findings on the usefulness and reliability of the reported performance information Budgets • Accumulated surpluses without the approval of National Treasury, in contravention of Section 53(3) of the PFMA Annual Financial Statements, Performance and Annual Reports • Unqualified Audit

26. AGSA’s Report Irregular expenditure:

27. AGSA’s Report Fruitless and Wasteful Expenditure

28. AGSA’s Report Emphasis of Matters Significant Uncertainties With reference to Note 23 of the financial statements, the NCC: • received legal claims amounting to R2 310 875. The ultimate outcome of these matters cannot presently be determined, and no provision was made in the financial statements for any liability in this regard. • disclosed a contingent liability of R5 224 237. This amount includes the surplus for the year ended 31 March 2013, which is awaiting approval from National Treasury.

29. AGSA’s Report Matters raised: Procurement and Contract Management • The preference point system was not applied in respect of all procurement of goods and services above R30 000, as required by Section 2(a) of the Preferential Procurement Policy Framework Act, and Treasury Regulation 16.A6.3(b).

30. AGSA’s Report Matters successfully dealt with from previous audit – 2012/13 • AGSA findings- 2013/14- 31 findings (23 fully implemented- 8 in progress) • disciplinary steps taken against officials who incurred and/or permitted irregular and/or fruitless and wasteful expenditure & payments were made in advance of the receipt of goods or services • CFO resigned • 10 disciplinary actions under way- includes 4 senior managers.

31. Key Challenges Vacancies • As at 31 March 110 positions out of 182 were vacant; • Off the 182 positions, 82 were funded posts. Off the 82 funded posts, 10 were vacant. • Formal restructuring will be undertaken- it is envisaged that most of the vacant/ unfunded posts will be abandoned; Skills • Whilst a skills audit has not yet been conducted at the NCC, it is apparent that a major skills shortage does exist within the entity; • A proper skills upgrade programme is not in place due to lack of funds. In the interim, internal training is provided; Complaints Backlog • Backlogs do occur from time to time; • Overtime has been implemented within Enforcement Division Irregular Expenditure • Bulk of irregular expenditure arises from lease; • 2 years to expiry of lease contract; • Cost of cancellation and possible relocation is not feasible in the short term.

32. Delegation Details Mr Ebrahim Mohamed- Commissioner- E.Mohamed@thencc.org.za - 0837865239 Mr Anton Van Der Merwe- Acting Head of Corporate Services- A.Vandermerwe@thencc.org.za Ms Prudence Moilwa- Head of Enforcement and Investigations- P.Moilwa@thencc.org.za Mr Babs Kuljeeth- Company Secretary- N.Kuljeeth@thencc.org.za - 0832739647

33. Thank You