Ten years ago, today, the Consumer Goods & Services Ombud (CGSO) opened for business, ushering in a new era of access to redress for South African consumers. This, after the Consumer Goods Council of South Africa proposed an industry Code to the National Consumer Commission, that for the first time, would allow consumers to turn to an independent industry body to help them resolve disputes with suppliers in the consumer goods and services sector. The legitimacy of the CGSO was later confirmed by the Minister of Trade, Industry and Competition when he promulgated the Industry Code of Good Practice on 30 March 2015, making it compulsory for qualifying suppliers to register with the CGSO and pay participation fees in accordance with the funding model approved by the CGSO Board. Since inception, the number of participants has grown from 24 founding companies, to 1,450 as at end of February 2023, an increase of some 5 942%. Participants include most of the major retailers, manufacturers, wholesalers, and distributors with retailers representing more than 23 517 stores across the country.

Over the last ten years, the CGSO has handled more than 66,438 complaints and responded to 170,344 calls, saving both consumers and suppliers millions of rands in legal fees and ensuring that justice and fair play prevails through providing a viable and trusted alternative dispute resolution mechanism as envisaged in section 70 of the Consumer Protection Act. The service is provided free of charge to consumers and is governed by a service-level agreement to ensure that complaints are dealt with expeditiously. 

Commenting on the CGSO’s milestone celebration, the outgoing Ombudsman, Ms Magauta Mphahlele, paid tribute to an organisation that had “brought to life the provisions of the Consumer Protection Act by ensuring that there are systems, processes and policies in place to receive and resolve complaints, and that through compliance awareness initiatives, qualifying suppliers have functional internal complaints handling-processes and systems.”  In that way south African consumers could and can continue to buy with confidence, knowing that suppliers of goods and services will uphold the law and treat them fairly.

The CGSO has continued to play a key role in ensuring fair play in the market by tracking and reporting on complaint trends, thereby helping to ensure that unfair industry practices are identified and eliminated, such as can be seen by the reduction in complaints around the sale of timeshare units, following the National Consumer Commission’s Enquiry into the businesses practices of the sector. Through collaboration with the Vacation Ownership Association of South Africa (VOASA), hundreds of consumers were released from unfair contracts or those that they could no longer afford. Other notable trends identified related to online transactions, pandemic related issues, and recently solar installations. Through engagement with individual suppliers, industry associations, regulators and other Ombuds, the CGSO will continue to work to ensure high levels of compliance and awareness with the Consumer Protection Act. 

The successes of the last ten years have been hard-won though. Despite the obvious advantages for both suppliers and customers to have access to a fair and impartial alternate dispute resolution service, it has not been without its challenges. These included a five-year legal challenge to the constitutional validity of the industry Code of Conduct, including the CGSO’s powers to levy annual participation fees on qualifying companies, prompting the organisation to seek a declaratory order from the High Court. The challenge was finally settled in December 2022 when an appeal against an earlier High Court decision declaring the Consumer Goods and Services Industry Code of Conduct valid, was withdrawn.

According to CEO, Queen Munyai, “The ruling by the North Gauteng High Court proved to be a turning point for the organisation as it freed us up to focus on our primary mandate, which is the provision of a free, functional, independent, accessible, and fair industry dispute resolution scheme. It also allows us to legally compel delinquent suppliers to pay membership fees, thereby spreading the burden of funding the Scheme among all players.”

In a victory for consumers, the court ruled that not only must all qualifying businesses in South Africa subscribe to the Code by registering with the CGSO, declaring their annual turnover, and paying the annual participation fees, but that the CGSO is entitled to approach a court or the National Consumer Commission (NCC) to report any contraventions of the Code. 

This includes failing to register with the CGSO or non-contribution towards the funding of the CGSO. This was crucial, says Munyai as, “One of our priorities upon inception was to ensure financial sustainability, which meant signing up qualifying participants since the CGSO is a non-profit organisation funded by industry. Together, we work to maintain the integrity of the industry, and to clamp down on rogue operators who would give it a bad name. In this regard, the rise in on-line shopping post-Covid, has seen a dramatic increase in the number of online complaints, and the number of consumer cautions we issue.

“None of this would have been possible though, without the support of key stakeholders. In many ways, this celebration belongs to them too. On behalf of everyone at the CGSO, I wish to express profound gratitude to the Consumer Goods Council of South Africa (CGCSA), who, on behalf of the industry, provided the seed funding which sustained the office for the first three years and provided the legal and administrative support, including the premises that we  operated out of in the in the early years; the National Consumer Commission who proposed the Code to the Minister for promulgation, and co-hosted the launch of the Code;  Minister Rob Davis, for promulgating the Code and for the continuous support from the Department of Trade, Industry and Competition; the 24 Founder Participants who came on board before it became compulsory to do so; each and every one of our participants who have since done the right thing and signed up; and to the media who have been instrumental in helping us reach consumers on key consumer rights issues.”

Munyai, who has assisted in setting-up the CGSO and its internal controls, is justifiably proud of its commitment to prudent fiscal management and is aiming for the 9th consecutive clean audit, which is commendable for an industry-funded organisation.  “Even as we celebrate the first 10 years of fair play, we are looking forward to the next 10 years of maintaining the scheme of Alternative Dispute Resolution (ADR) in the industry and working with other regulators and fellow Ombud offices to ensure an environment in which consumers can transact with confidence, both now and in the decades to come,” she concludes.