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Send  Share  RSS  Twitter  19 Jan 2011

BUSINESS: Delay Of Consumer Protection Act Helps Business

 





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While the implementation of the Consumer Protection Act (CPA) may be delayed, its introduction is inevitable. And while potentially frustrating for consumers who are looking for relief, the postponement gives businesses of every kind a valuable opportunity to ensure that when the Act is promulgated they need not fear any repercussions from their business practices or products, but can be ready with a compliant organisation delivering quality products and services.

That’s according to Brandell Turner, managing director of Turner and Associates Attorneys in Cape Town.

“Love it or hate it, the Consumer Protection Act has been passed by Parliament and it is coming. Preparing for it means mitigating any potential risks arising from a violation of the Act, especially the clearly defined prohibited practices cited in the Act,” says Turner.

While it is designed to bring relief to consumers from unfair practices and inferior products, Turner nevertheless says there is potential for the Act to stifle entrepreneurship.

“Bigger companies have the resources to ensure compliance and a high standard of products and services which is required by the Act. However, the Act does not discriminate between large companies and small or micro enterprises. The concern is that small shopkeepers and other such businesses may easily find themselves in breach of the Act and may not have the means to prevent it or litigate a court claim and this may affect the sustainability of small businesses and discourage potential entrepreneurs who may perceive the standards set in the Act as too onerous,” he explains.

That said, Turner believes there is a definite need for the legislation. “Business organisations are stronger in South Africa than consumer protection groups are. They have a louder voice and are more institutionalised. While the CPA therefore aims to shift the balance somewhat, this does not completely tip the scales in favour of the consumer. The Act however gives legislative recognition to Consumer Protection Groups as a voice for consumers. Turner believes that if the Act is to have its desired effect, Consumer Protection groups should become particularly active in championing the cause for consumers.

Despite the balance of power still favouring business, owners of businesses of every kind should nevertheless take the time to understand the Act and ready themselves for it. “Remember that preventing a claim against your company is going to be far better than trying to solve one through a costly legal process after a violation of the Act.”

The answer to preparing is fairly straightforward. It depends on education, says Turner. “Especially for the smaller operation, owners and managers are encouraged to get ‘hands on’ with the legislation. They should consider a gap analysis, looking at the organisation, its transactions and the type of goods and services supplies and the warranties it offers. These should be superimposed on the Act to provide something of a checklist which will determine their state of readiness for the Act. Where there are potential breaches, training interventions may be necessary, processes may require tightening or product quality and warranties increased.”

Essentially, continues Turner, the time afforded by the delay in the implementation of the Act provides businesses with a clear opportunity to step up what is in effect a risk mitigation exercise. “It is a compliance issue and it will incur a cost. However, by being proactive, every business can become compliant and in so doing, step up their level of customer service and satisfaction. Such a perception changes the viewpoint of compliance with the Act from being a mere expense, to being an investment in the performance and quality of the business. In turn, the Act can therefore actually deliver an advantage to your business.”


 
 
 
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