PRESENTATION TO THE PARLIAMENTARY PORTFOLIO COMMITTEE TRADE AND

PRESENTATION TO THE PARLIAMENTARY PORTFOLIO COMMITTEE: TRADE AND INDUSTRY ANNUAL REPORT 2013 -14 FIRST QUARTER REPORT 2014 -15 NATIONAL CONSUMER COMMISSION 16 SEPTEMBER 2014 Mr EBRAHIM MOHAMED COMMISSIONER 1

OUTLINE OF PRESENTATION • Overview of annual report • Strategic objectives • Achievements against planned targets • Financial management • Key challenges and financial projection 2

KEY HIGHLIGHTS FY 2013/14 3

KEY HIGHLIGHTS • NCC received an unqualified opinion; • Investigation into meat labelling; • Led to meat labelling regulations being promulgated by Minister. Other recommendations being followed up; • Horse meat investigation conducted • Investigation into the timeshare industry • Complaints backlog dealt with. (Assisted by Alternate Dispute Resolution Agents within key industries); • The NCC and the National Consumer Tribunal hosted its first consumer protection summit. 4

KEY HIGHLIGHTS • Hosted seventeen workshops targeting women, people living with disabilities, SMMEs and community members in Gauteng, KZN, Free State and Western Cape; • 20 product recall notifications issued; • Participated in the revising of the United Nations Guidelines on Consumer Protection; • Secured returns, refunds and replacements for consumers; • Motor industry code submitted for accreditation. 5

Regulatory Context 6

Regulatory Context • the dti is the custodian of Consumer Protection policy; • NCC is established in terms of Section 85 of the Consumer Protection Act (CPA); • Jurisdiction throughout the Republic of South Africa. • Core responsibility is to enforce and carry out the functions assigned to it in terms of the CPA. • The CPA seeks to promote a fair, accessible and sustainable marketplace for consumer products and services and for that purpose to establish national norms and standards relating to consumer protection. 7

Regulatory Context • It further seeks to provide for improved standards of consumer information, to prohibit certain unfair marketing and business practices, to promote responsible consumer behaviour and to promote a consistent legislative and enforcement framework relating to consumer transactions and agreements; • NCC has concurrent jurisdiction on Consumer Protection in RSA- jurisdiction is shared with Provincial Consumer Protection Authorities. 8

Strategic Objectives 9

STRATEGIC OBJECTIVES The following are the revised strategic objectives : Strategic Objective 1 • To promote compliance with the Consumer Protection Act Strategic Objective 2 • To be a well governed and capacitated organisation • NCC has the following divisions in order to give effect to the strategic objectives o Enforcement and Investigations o Advocacy, Education and Awareness o Research o Legal 10 o Corporate Services

Achievement against Targets 11

Achievement against Targets introduction • 49 out of 72 officials, including managers, are involved in operations; • 12 measures/ indicators- 20 targets; • Fully achieved on 8 measures- 16 targets; • 4 targets not fully achieved- more than 50% achieved on 2 targets; • Plans put in place to ensure that targets are achieved in future; • Despite problematic beginning, NCC has stabilised; • NCC received a qualified audit in 2012/13 (prior year); • From a compliance perspective, NCC made tremendous progress on previously non-existent Internal Audit and 12 Risk Management functions.

Achievement against Targetsintroduction • Irregular expenditure is being managed effectively; • Irregular, fruitless and wasteful expenditure, deviation and invoice registers have been implemented as internal control measures; • The asset register and payment processes have been revised; • All 96 findings made by AGSA in the 2012/13 financial year have been dealt with and monitored; • To improve on service delivery, each Division has introduced standard operating procedures; • The Audit and Risk Committee has met several times in the course of the year and engaged in meaningful deliberations with NCC; 13 • Irregular expenditure which stems from transactions

Achievement against Target Performance indicator & target Achievement Reasons for variance 95% of complaints received registered on an average of three days 100% of complaints received registered on an average of three days Target exceeded due to improved efficiencies in the registration of complaints. 95% of registered complaints analysed on an average of eight days 98% of registered complaints analysed on an average of six days Target exceeded due to improved efficiencies in the analysis of complaints. Analysis procedures have been revised and implemented. 60% of complaints resolved on an average of 80 days 86% of complaints resolved on an average of 297 days The Percentage of complaints target was exceeded due to an increase in the referrals to Consumer Goods and Services Ombud and Motor Industry Ombud. The average number of days targeted to resolve the complaints was not met. This is due to the fact that the quarter one and quarter two resolution statistics included carried over 14 and backlog complaints. The resolution

Achievement against Targets Performance indicator & target Achievement Reasons for variance 30 investigations and Inspections finalised and approved by the Commissioner In total, 41 Investigations and Inspections have been finalised and reports drafted and approved by the Commissioner The NCC had to approve more investigations than envisaged due to a high number of timeshare entities involved in the investigated business practices indicated in complaints trends 100% of complaints Backlog resolved by end February 2014 Backlog of 6045 complaints reduced by 5533. Pending 512. Percentage reduced: 92% The 08% of pending complaints comprise non-referrals. The non -referral letters had been drafted by the end of the financial year but were undergoing quality control. Recommendation of 2 codes to Minister One Industry Code recommended to Minister The receipt of codes is dependent on industries or sectors applying for accreditation. However, the NCC has embarked on a process of pro-actively 15 identifying sectors where codes are necessary. Consultations

Achievement against Targets Performance indicator & target Achievement Reasons for variance One code of good practice developed Draft section 93 code of good practice for the return of vehicles within the motor industry is still under development 12 Workshops 17 Workshops conducted. 08 Mall/Train/Exhibitions 09 Exhibitions held The code for good practice could not be finalised as it is dependent on the accreditation of the Motor Industry Code which has not yet been accredited by the Executive Authority. The accreditation took longer than initially anticipated. Target exceeded due to high demand from stakeholders 1 school Consumer Club Established 1 School Consumer Club at the Sunnyside Primary School was established Meetings held with critical stakeholders 13 Meetings held with various key stakeholders Target exceeded due to high demand from 16 stakeholders

Achievement against Targets Performance indicator & target Achievement Reasons for variance 2 media releases 6 media releases issued Target exceeded due to high levels of product recalls Participation in Conferences. Target met The NCC addressed the following 6 conferences: The Africa Dialogue Conference held in Zambia; Four conferences held in Durban, Gauteng, Cape Town and Namibia on Complaints Management; and the World Retail Conference The NCC also participated in the seminar hosted by Consumers International on the amendment of UN Guidelines on Consumer Protection. 12 Media Responses 15 Media responses were issued Target Exceeded due to high demand from the 17

Achievement against Targets Performance indicator & target Achievement Reasons for variance Annual Report prepared, approved and tabled in Parliament 4 internal newsletters prepared and distributed internally, 1 per quarter Target met 39% of Vacant positions filled 40% of positions filled in the new approved structure Target met Develop high level ICT strategy Strategy not yet developed. Insufficient internal capacity. Process underway. Will be completed in Insufficient internal capacity. 2014/15 financial year Will be completed in 2014/15 financial year Revised risk register and strategy in place Risk Register and strategy Revised. Annual Report Internal Newsletters Target met 18

FINANCIAL MANAGEMENT 19

Linking performance with budgets STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS for the year ended 31 March 2014 Actual Difference amounts on between Approved Adjustment Final comparable final budget Budget s budget basis and actual R R REVENUE Revenue from nonexchange transactions Revenue from exchange transactions TOTAL REVENUE EXPENDITURE Employee related costs Amortisation and depreciation Operating expenditure TOTAL EXPENDITURE 44 516 000 - 44 516 000 45 477 824 961 824 44 516 000 - 44 516 000 326 078 45 803 902 326 078 1 287 902 27 931 198 - 27 931 198 27 954 894 (23 696) 647 000 15 937 802 13 361 911 2 575 891 44 516 000 41 316 805 3 199 195 44 516 000 - 647 000 Note: The annual financial statements for the National Consumer Commission are prepared on the 20 accrual basis using a classification based on the nature of expenses in the statement of financial performance. The annual financial statements therefore differ from the budget, which is approved on a

Overview of Expenditure Summary: • The expenditure of R 41, 317 m, if compared to the approved budget of R 44, 516 m, reflects an underspending of R 3, 199 m (7%). • Underspending was mainly on Goods and Services, where creditor invoices totalling R 1, 708 m were only received and paid after financial year-end, whereas expenses relating to the lease of office space decreased following negotiations with the service provider to this effect. 21

Linking performance with budgets Name of subprogramme Item Legal Division In the matter between Final Actual Under Appropriati Expenditure on (R) (R) 250 000 184 288 NCC and NCT Nehawu vs M Mohlala and NCC Publication costs Travel and Subsistence Education and Printing and Publication Awareness Travel and Subsistence Enforcement Consultant Costs: Meat & Investigations Travel and Subsistence Total 13 576 52 136 400 000 256 371 143 629 100 000 430 000 100 000 43 649 302 207 28 708 62 051 56 351 127 793 71 292 37 949 400 000 1 780 000 346 188 1 237 038 53 812 542 962 22

Linking performance with budgets Name of subprogramme Corporate Services Item Consultant Costs Travel and subsistence Computer Services Final Actual Under Appropriatio Expenditure n (R) (R) 1 000 868 500 131 500 200 000 40 000 160 000 568 624 458 029 110 595 1 768 624 1 366 529 402 095 Total 23

Statement of Financial Performance 2013/14 year STATEMENT OF FINANCIAL PERFORMANCE 31 March 2014 NOTES 2014 2013 - Restated R R REVENUE Revenue Other income TOTAL REVENUE EXPENDITURE Employee related costs Amortisation and depreciation Operating expenditure TOTAL EXPENDITURE SURPLUS FOR THE YEAR 9. 1 9. 2 45 498 094 372 293 45 870 387 48 296 490 101 667 48 398 157 10 12 28 045 226 1 822 520 22 991 100 1 070 544 18 15 048 544 20 361 889 44 916 290 44 423 533 954 097 3 974 624 24

AGSA Report Performance Information: • No material findings on the usefulness and reliability of the reported performance information Budgets • Accumulated surpluses without the approval of National Treasury, in contravention of Section 53(3) of the PFMA Annual Financial Statements, Performance and Annual Reports • Unqualified Audit 25

AGSA’s Report Irregular expenditure: 26

AGSA’s Report Fruitless and Wasteful Expenditure 27

AGSA’s Report Emphasis of Matters Significant Uncertainties With reference to Note 23 of the financial statements, the NCC: • received legal claims amounting to R 2 310 875. The ultimate outcome of these matters cannot presently be determined, and no provision was made in the financial statements for any liability in this regard. • disclosed a contingent liability of R 5 224 237. This amount includes the surplus for the year ended 31 March 2013, which is awaiting approval from National Treasury. 28

AGSA’s Report Matters raised: Procurement and Contract Management • The preference point system was not applied in respect of all procurement of goods and services above R 30 000, as required by Section 2(a) of the Preferential Procurement Policy Framework Act, and Treasury Regulation 16. A 6. 3(b). 29

AGSA’s Report Matters successfully dealt with from previous audit – 2012/13 Number of action Status Percentage plans 78 Fully Implemented 81% 18 In progress 19% 96 Total 100% • AGSA findings- 2013/14 - 31 findings (23 fully implemented- 8 in progress) • disciplinary steps taken against officials who incurred and/or permitted irregular and/or fruitless and wasteful expenditure & payments were made in advance of the receipt of goods or services 30

Key Challenges Vacancies • As at 31 March 110 positions out of 182 were vacant; • Off the 182 positions, 82 were funded posts. Off the 82 funded posts, 10 were vacant. • Formal restructuring will be undertaken- it is envisaged that most of the vacant/ unfunded posts will be abandoned; Skills • Whilst a skills audit has not yet been conducted at the NCC, it is apparent that a major skills shortage does exist within the entity; • A proper skills upgrade programme is not in place due to lack of funds. In the interim, internal training is provided; Complaints Backlog • Backlogs do occur from time to time; • Overtime has been implemented within Enforcement Division Irregular Expenditure • Bulk of irregular expenditure arises from lease; 31 • 2 years to expiry of lease contract;

Delegation Details Mr Ebrahim Mohamed- Commissioner- E. Mohamed@thencc. org. za 0837865239 Mr Anton Van Der Merwe- Acting Head of Corporate Services. A. Vandermerwe@thencc. org. za Ms Prudence Moilwa- Head of Enforcement and Investigations. P. Moilwa@thencc. org. za Mr Babs Kuljeeth- Company Secretary- N. Kuljeeth@thencc. org. za 0832739647 32

Thank You 33