PORTFOLIO COMMITTEE ON TRADE AND INDUSTRY National Consumer Commission progress report

1. PORTFOLIO COMMITTEE ON TRADE AND INDUSTRY National Consumer Commission progress report (third quarter) 15 FEB 2012

2. Delegation Ms Mohlala- National Consumer Commissioner Mr Kgabo Mantsho - Chief Financial Officer Mr Ntseileni Netshitoboni - Director : Information and Communication Technology

3. PORTFOLIO COMMITTEE ON TRADE AND INDUSTRY Successes and Challenges Enforcement and Investigations

4. Compliants Handling status Complaints • Calls received -Average -8000 per month • Dropped Calls (Not Picked up because of capacity ) – 20 000 per Month • Actual complaints- 9 709 • Reformulations - 680 • Withdrawals - 237 • Advisory Opinions - 4 506 Total 15 132 Staff complements • Call Centre Agents- 5 • Professional Staff -6 • Contract Workers –31 • Qualified Conciliators – 3( two on contract ) • Total Complaints Handling staff compliment -45

5. Complaints handling successes Systems: • Enforcement guidelines, • developed procedure manual / standard operating procedures • Developed work streams and Categorization of complaints , • Bulk disposal Resolution of Complaints • Resolution rate still at 42.5% • Consent agreements concluded: 2301 • Compliance notices issues – 301 • Referrals and Non referrals –362 • Conciliations – 1160 Total number of resolved matters- 4 124 • 06 Compliance certificate issued thus far • Keeping consumers informed

6. INVESTIGATIONS SUCCESSES ICT Sector • The Mobile operators: Transgressions: Section 48 Unfair Contract terms, Section 63- expiry of minutes; Section 54; Limitation of liability - Regulation 44(3), Section 14(1) fixed terms contracts –Issued Compliance Notices –Objections raised • Pay TV- Unfair Contract Terms, Bundling-Issued compliance Notices to Top TV , Multi-choice • Objections to notices

7. INVESTIGATIONS SUCCESSES continued • Public Broadcaster: SABC - The disclosure of information about the terms and conditions of TV Licenses • Television licence terms and conditions Finalised by NCC • Consent Agreement Drafted discussions to be concluded • Section 54- Availability of SABC Radio Station’s Frequencies and Broadcasting Coverage Services: • Requested and received low-power transmitter expansion plan of the SABC • Prepared and distributed questionnaires to over 140 NGO’s across the 9 province – received few responses (out of Emails sent out 4 responded)

8. INVESTIGATIONS SUCCESSES continued Compliance with -Section 48 – Unfair Pricing – Pre-paid Data-Section 63 of the CPA Identified 7 ICT entities that have terms and conditions for Data Bundle : G Connect Vodacom, MTN, FNB Connect, I BURST, Telkom -8ta -The terms and Condition of the entities – negotiations communication with entities underway to ensure compliance International Roaming Service charges-Triggered by complaints received :28 Agreement to be assessed: Applicable tariffs, comparative analysis -Service provider to be appointed

9. INVESTIGATIONS SUCCESSES continued Goods and Services in the Medical and Pharmaceutical Industry- • Open Medical Schemes-Top four Medical scheme rules, membership application forms/contracts in-depth analysis into those rules and membership application forms/contracts. • The rules and contracts of the following 4 open medical schemes were analyzed: Fed-Health, Bonitas, Medshield Medical Schemes and Momentum : • Right of consumers to select suppliers –DSPs, Unfair contract terms (excessively one sided clauses – the right to suspend terminate contracts, Waiting period- discriminatory practices, Unilateral changes to terms and conditions .

10. INVESTIGATIONS SUCCESSES continued • Consultations with all top four Schemes and Council for medical Aid Schemes • Concluded interactions with open medical Aid schemes • Report to be finalized by 15 December 2011

11. INVESTIGATIONS SUCCESSES continued • Pharmaceutical Industry -Goods and services offered and supplied within the pharmaceutical industry: Costing of Medicines: Advertising and Marketing, Disclosure of Prices • Confirmed with Medicines Control Council to establish a task team on the MOU between the MCC and the NCC • Workshop with the Pharmaceutical Steering Committee held - Identified the following • Disclosure of Information • Fair Pricing

12. INVESTIGATIONS SUCCESSES continued • Retail and Manufacturing: Disclosure of prices of goods and services in terms of section 23;Consumer’s right to return goods in terms of section 20 read together with section 56. Lay – bys in terms of section 62 and regulation 34; • The Retail and Manufacturing investigation focused on the retail outlets were inspections were conducted, • The Commission sent correspondence to retailers who had not responded to the compliance letters forwarded in quarter 2. • Checkers Shoprite –Meeting – information and Correspondence still under review • Pick and Pay, –First was on Interaction- 07 December 2011 • Lewis Group • JD Group – Interactions under way • Pumpkin Patch – response received – still to meet

13. INVESTIGATION SUCCESSES continued • Nationwide inspection – Focus; rural areas (NPA and SAPS – Partnership)-Returns and refunds; Price disclosures/ Trade Descriptions- Code of Conduct , quality service –section 54 and 55 • Inspection in townships and other retailers

14. INVESTIGATION SUCCESSES continued • Public Transportation Industry – Section 63 • Tickets: Voucher utility expiry period: Ticketing policies assessed- • Letters sent to Entities • Putco (responded to Commission’s) • North West Transport • Metrorail • Gautrain -response letter received • The Commission has met with Gautrain in October 2011 • To include privately owned public transportation on compliance

15. OPERATIONAL CHALLENGES • Insufficient budget impacting on the efficiency of the office • Insufficient capacity in relation to human capital with relevant expertise • IT challenges i.e. Telephone system , insufficient computers • Manual operation hampers efficiency of the office

16. Legal services unit PORTFOLIO COMMITTEE ON TRADE AND INDUSTRY Successes and Challenges Legal Services Unit

17. Legal services successes • The NCC came into being in April and has already issued many Compliance Notices. • At this point we have fifteen matters before the National Consumer Tribunals. • These are big matters the resolution in favour of consumers of which will have real impact in favour of consumers throughout the telecommunications sector. • We have managed to maximize our resource to avoid unnecessarily using the services of external services providers for example vetting all agreements we enter into with external services providers like lease, software licenses etc, doing Industry codes internally, doing guidelines on advisory opinions internally etc. This has saved the Commission hundreds of thousands of Rands

18. Legal services – successes continued • We have managed to agree a reduction of legal costs with various Attorneys and Advocate without compromising the quality of the work and that has saved us money. • Without a dedicated call center and file management system, we have managed to take in more than hundreds of thousands of complaints which is never easy to do manually. • We have recruited within the legal department, eight legal graduate who are currently undergoing training when we could have recruited people who does to necessarily require training in line with government policy on skills transfer and training.

19. Legal Services - Challenges • One of the most expensive to run department within the NCC is legal. This costs of Counsel, which can be as a High as R 75 000 a day to run one matter • The one challenges is that the systems of the NCT has for long been dealing with the NCR and it has been a big challenge adjusting receiving a new agency.

20. Legal Services - Challenges continued • Although it has been mentioned as a success, but using internal resource s to do some work that could have been done by external resources and could not be done due to limited financial resources has taken human resources away from the legal department from doing administrative and policy analysis • Human Resource has been one of the biggest challenges. Currently the structure makes provision for six Legal Advisors and we do not have any due to budgetary. • The Department is also in need of research tools i.e. law reports etc.

21. Legal : Exemptions and Accreditation of Industry Codes (EAIC) PORTFOLIO COMMITTEE ON TRADE AND INDUSTRY Successes and Challenges Legal : Exemptions and Accreditation of Industry Codes (EAIC)

22. EAIC successes • The initial guidelines for accreditation of industry codes were published for comment on 7th April 2011. • Industry and interested parties provided useful comments on how best the guidelines should be formulated to cover all industry applicants. • A seminar was held to consult and update the industry on status update and way forward regarding accreditation of codes guidelines • The study to finalize guidelines resumed in October 2011. • Terms of references, project plan and questionnaire were prepared to facilitate the study and finalization of guidelines. • Three industry associations were invited to participate in the study on accreditation guidelines, Advertising Standards Authority of South Africa, Airline industry South Africa and Consumer Goods Council South Africa

23. successes • We have provides advice to the Minister on exemption application from the Council for Medical Aids Schemes • We have recruited three interns to assist with finalization of the accreditation guidelines

24. EAIC challenges • Finalization of the industry accreditation guidelines was postponed until end of the financial year 2011. • Industry not ready to provides codes to commence with the study. • Lack of resources to perform the study exercise. • Appointment of a service provider to assist with the study did not succeed because of costs and failure to meet the terms of reference

25. Awareness Education and stakeholder PORTFOLIO COMMITTEE ON TRADE AND INDUSTRY Successes and Challenges Awareness ,Education and Stakeholder unit

26. Statistical Presentation No. of NCC Staff ( Advocacy; Education and Awareness): 7 South African Population : 48 million Ratio: NCC staff members to population size is 1: 6. 857. 000 26

27. Awareness Education and stakeholder- successes Consumer Education • Rural Outreach: Izimbizo ( North West; Free State and Limpopo)- 2500 • Consumer Workshops : Stokvel Women; Youth; School Children on Nelson Mandela Day; Educators; Department of Public Works; Independent Electoral Committee; Kagiso Community Church; Pretoria Post Office; the dti Exhibition : Taking the dti to the people; taxi and train commuters and malls)- 4274 • Media ( Interviews and Articles): Featured on 20 publications ( print and electronic)- Nationwide • Business Education ( Presentations/ Meetings): Chambers of Business and directly to business- 208

28. Awareness Education and stakeholder - successes continued Standing Advisory Committees • TOR developed; Adverts placed with newspapers; Meetings held with Disabled Persons South Africa and Provincial Consumer Affairs Offices; Nominations received from BUSA, Continuous engagement with other government departments such as the Department of Women Children and Persons with Disabilities.

29. Awareness Education and stakeholder - successes continued Accreditations of Consumer Protection Groups . Workshops held for advice offices throughout the 9 provinces (208 participants); Study on state of readiness to assist consumers in line with the CPA completed. SADC outreach • Road show underway to SADC, Zimbabwe visited • Meeting held with SADC secretariat in Botswana • To host a conference in March 2012 to launch a SADC Sub-Committee on Consumer Protection

30. Awareness Education and stakeholder - Challenges External • Province to Province Cultural Diversity : (Norms and Traditions; power struggles) • Political Diversity: Use of certain terms ( Imbizo) said to have political connotation linked to a certain political party • Provincial Budgetary constraints for cooperative initiatives • Political/ Traditional Factions: Barrier to entry • What is in it for me attitude: Barrier to entry

31. Awareness Education and stakeholder - Challenges continued Internal • Budgetary Constraints: Biggest Cost Driver, budget inadequate • Human Resource Limitations: 80% of staff complement are contract workers and require intense training • Inadequate IT equipment and systems • Inadequate Internal processes

32. CORPORATE SERVICES PORTFOLIO COMMITTEE ON TRADE AND INDUSTRY Successes and Challenges Corporate services unit ( financial management, Information and communication technologies and human resources)

33. Financial management successes • Drafting of financial policies and procedures • Setting up the following committees : bid evaluation, bid adjudication and audit committee • Complying with shareholder compact agreement and preparing monthly financial statements and relevant quarterly reports • Setting up the audit committee • Getting NCC budget in its own account and managing it efficiently

34. Financial management – successes • Procuring the accounting and human resource (ACCPACK and VIP payroll) software • Adequately resourced division with most key positions filled.

35. Financial management – challenges • Late transfer of funds into NCC bank account disabling the NCC to timorously pay its service providers • Budget constraints that negatively impact the business strategy • Sharing responsibility of signing March 2012 financials (the Dti & NCC) • Transfer of assets from dti Fixed assets register

36. Information and Communication Technology (ICT) Successes and Challenges

37. ICT -Sucesses • ICT policies have been drafted • ICT Director appointed • Server room established • LAN fully developed • Computers evenly distributed • Call centre management has been implemented • Microsoft Softwares deployed

38. ICT - Sucesses • Case Management System ready for implementation • Registration of our own domain name into .org.za

39. ICT - challenges • Realignment of the strategic approach • Integration of different areas into the strategy • Lack of support IT staff • No ownership of website • Struggling to get Telkom/Neotel line due to theft of copper

40. ICT challenges continued The following TOR haven't been implemented due to insufficient funds • Business Recovery Plan (BPR) • ERP with the ICT plan • Case Management System Implementation (Budget) • Lack of support IT staff • Power cuts (potential damage of the server)

41. Human Resources (HR) Successes and Challenges

42. HR - Successes • HR Policies were developed and approved at MANCO • All positions on Chief Director level have been filled • Total staff is 81 employees (47 on contract 34 permanent) • 46% of staff is males and 54% is female • 45 unemployed graduates appointed on contract (admin level)

43. HR - Sucesses - continued • 4% of current staff is disabled • Climate survey results were positive • Implementation of VIP payroll system

44. HR Challenges • Only 32 out of 135 (24%) ofapproved positions have been filled (Budget constrains and under staffed) • (2/5) 40% of staff on executive level is female and (3/5) is males • High volume of work with only few employees • High staff turnover rate in October - NEHAWU members going back to the dti

45. HR challenges - continued • Poor communication between NCC and the dti on staff issues; • Lack of performance management system; • Lack of relevant skills in the market i.e. senior investigators and researchers, statistician.

46. YTD Budget Summary31 December 2011 Revenue R33 107 646.05 Less operational costs R20 628 788.91 Balance after op costs R12 478 857.14 LESS CAPEX IT R3 481 466.94 Computer Hardware R 92 000.00 Furniture R1 236 505.69 Total balance after CAPEX R7 668 884.51

47. YTD Budget Summary31 December 2011 - Continued Total Balance (B/F) R7 668 884.51 Other big payment to be processed in January Payroll deductions R 2 057 370.54 Rent R 510 000.00 Call Centre deposit R1 441 000.00 Security R 54 000.00 ESTIMATED BAL END OF JAN R3 606 513.97

48. Conclusion • Thankyou • Ke ya leboha • Nda levhuwa