Power Report: Cell firms drop the ombudsman

No big surprise that gripes about cellphones top the list of complaints to the consumer goods and services ombudsman.

But when you consider that the industry earned this position as a "non-player", things become even more telling.

At least six months' worth of cellphone complaints - from all networks bar one - were not recorded in the ombudsman's 2015-16 annual report released this week.

Why? Because the ombudsman stopped handling these complaints in July last year because of the network providers' "continual refusal" to participate in - and pay towards - its accredited scheme.

The ombudsman is the recognised consumer goods industry dispute resolution body, part of the Consumer Protection Act's enforcement framework.

The "no pay, no play" scenario means the 951 listed complaints under "cellphones" - compared, for example, with 795 for "services" (from moving companies to pool installation); 523 for furniture; 343 for electrical appliances and 140 for computers - is hardly a true reflection of the year's complaints.

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Of the 951, most (613) were against MTN, followed by Vodacom with 110 and Cell C with 62. MTN was comparatively high because of its long strike, and the fact that the network had run the ombudsman's contact number on its website.

But most significantly, MTN is the only cell network that subscribes to the ombudsman's office, so its complaints were counted for the entire year.

Ombudsman Neville Melville said this week: "Some of the cellphone service providers are of the view that because they are regulated by the Independent Communications Authority of South Africa, our office does not have jurisdiction to deal with their complainants.

"Our view is that the 'electronic communication service' as defined in the Electronic Communications Act is covered by Icasa but that 'subscriber equipment' is not," said Melville.

Icasa deals only with billing and reception-related network disputes, which left defective handsets and contractual-related disputes unregulated, he said.

"We have asked the National Consumer Commission to make a call on the issue."

MTN doesn't need convincing. It believes the supply of devices and certain contractual issues "fall squarely" within the ambit of the consumer act, and that the consumer goods and services code is applicable.

So what's the problem with the others?

Said Cell C's Karin Fourie: "Following discussions with the National Consumer Commission, it was resolved that the commission would for now continue to deal with these matters without referring them to another body."

But surely the ombudsman would be the more efficient office to assist consumers?

block_quotes_start There was an agreement that an alternative dispute resolution platform is needed to deal with handset and billing matters. block_quotes_end

"In our experience, the NCC is capable of handling complaints and resolving disputes timeously and effectively," she said.

Really? It's not the feedback I've had from consumers. Nor is it necessarily the ombudsman's experience either.

According to the report, it's not known what happens to cases once escalated to the commission by consumers.

"In some of these cases, the complainants reported some challenges with having their cases dealt with by the NCC and both entities are working on ways to ensure consumers' access to proper and effective redress," the report reads.

The situation with cases referred directly by the ombudsman also seems less than ideal. There's been no feedback from the NCC on at least four cases - one of them involving multiple suppliers - referred to it last year for investigation and action. (Not that the NCC is obliged to report back.)

Vodacom denied it had "declined subscription" to the ombudsman scheme.

Instead, it told me, it was in discussions with the NCC regarding complaints handling and mediation by "an accredited alternative dispute resolution agent".

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For now, all complaints were channelled through the commission and Icasa, it said.

Telkom said it enjoyed a "well-functioning relationship" with the commission and all complaints were attended to.

The commission's Trevor Hattingh said the commission was unable to compel networks to subscribe to the ombudsman's office because of "ambiguity" in the ombudsman's code around the description of goods in relation to handsets.

"There was an agreement among the parties that an alternative dispute resolution platform is needed to deal with handset and billing matters. This provides an opportunity for the [ombudsman] to still engage the network operators on this issue," said Hattingh.

Is this about money, perhaps?

Interestingly, Hattingh said the networks were not against subscription to the ombud but had asked for a "different arrangement" regarding paying subscription fees. Eligible participants are required to pay set annual fees according to turnover, ranging from R1,500 for turnover of between R1-million and R5-million, to R250,000 for amounts above R3-billion.

Hardly the kind of money to cripple an industry. The ombudsman believes a per-case fee might actually be a fairer approach, given the disproportionately high number of complaints from this massive industry. That may well cost the networks more in the long run.

I believe consumers would be better served through the ombudsman; the average time to close a file is 57 days and that's while operating under immense strain, with a limited budget and staff. More staff are set to be hired this year.

Between March 2015 and February 2016, nearly 2,200 out of almost 3,500 cases opened by consumers with the ombudsman were finalised.

Of the cases where there was an outcome, nearly 70% involved the consumer getting all or part of what was claimed or some other assistance. Impressive.

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The commission itself has lauded ombudsman schemes like Melville's for their ability to deliver speedy, effective redress to consumers. The commission has encouraged consumers to make use of such schemes, freeing it up to perform its regulatory role of conducting inspections, imposing compliance notices and prosecuting cases before the National Consumer Tribunal.

Other businesses, too, are thumbing their nose at Melville's office. In at least 6% of cases, suppliers refuse to co-operate with the ombudsman, while some participate in dispute resolution but ignore the recommendations.

Although industry participants are bound to register with the scheme, they are not forced to accept its rulings.

And even the commission and tribunal can't order compensation for loss or damages suffered; a consumer has to institute a civil claim.

Which makes informal ombudsman resolution processes even more necessary.

So far only 189 industry members are signed up to the consumer goods and services ombudsman.

"We will be stepping up the pressure in due course and are considering various approaches," said Melville this week.

Forced to apply pressure. What a sad indictment ofso-called "customer-centric" businesses.

Find the full report at cgso.org.za or call 0860-000-272

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