Consumer goods ombud looks to High Court to get businesses to pay up

The future of the Consumer Goods and Services Ombudsman (CGSO) - a vital dispute resolution service for consumers who feel their rights have been rubbished by retailers - is at risk because thousands of businesses are refusing to register and fund it.

"This would have disastrous consequences for consumers‚” says Ombudsman Neville Melville‚ because the National Consumer Commission‚ which was mandated to handle individual consumer complaints relating to the Consumer Protection Act no longer does so‚ after becoming swamped. That role has since 2013 been filled by the CGSO with respect to retail complaints.

In a bid to prevent that‚ Melville and the CGSO‚ a not-for-profit company‚ have applied to the High Court in Pretoria for an order declaring that its code of conduct makes it compulsory for eligible businesses to sign up and pay towards the CGSO’s operating costs‚ and that they be compelled to disclose their annual turnover figures in order to determine their fee.

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The fees range from R1‚500 a year for businesses with an annual turnover of between R1-million and R5-million‚ to R250‚000 for those with a turnover of more than R3-billion.

They would be lower if more businesses joined and contributed to the CGSO’s cost‚ Melville said in his supporting affivadit.

But while most of the major retail groups have registered with the CGSO and pay their fees‚ the refusal of many thousands of other businesses to come to the CGSO party has put the organisation “under severe financial pressure and in an untenable situation”‚ Melville said.

That’s because his office has to use its resources to deal with all complaints submitted by consumers - for whom it’s a free service - irrespective of whether or not the business they are complaining about is a CGSO member.

In fact‚ Melville said‚ the CGSO would have been forced to close down at the end of the 2014/5 financial year had the office not offered existing members a discounted annual levy if they made early payment for the following year.

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It has the fewest staff members by far - just 12 - of all the Ombuds’ offices operating in South Africa‚ and they handled 5‚453 complaints in the last financial year‚ that number being expected to reach 6‚000 in the current year.

While they aimed to resolve complaints within two months‚ scores of cases remain unresolved beyond that time because the office can’t afford to employ more staff‚ Melville said in his affidavit.

The respondents are the Minister of Trade and Industry‚ the Consumer Goods Council and Bidvest company Voltex‚ which paid its CGSO fee last June and then two months later demanded a refund on the grounds that the Ombud’s code did not allow for the levying of a fee.

The CGSO has been refused overdraft facilities by its bankers‚ has limited reserves and can’t look to either the Consumer Goods Council or government for financial assistance if its funds run out by the end of the year‚ Melville said in the affidavit.

- TMG Digital/TimesLIVE