The power of an Industry Code

The Consumer Protection Act enables industries to draft and agree a customised code of conduct, which, once accredited by the Minister of Trade and Industry, binds all of the industry members. Such a code can include a scheme for alternative dispute resolution, i.e. an ombud. Once there is an ombud in place for an industry, the National Consumer Commission should refer all consumer complaints in respect of that industry to the ombud.

Several industry codes are in the pipeline- the consumer goods and services industry, advertising industry, and automotive industry have each put together a draft code and applied for it to be accredited.

Why does it make sense for every industry to have an industry code, and possibly an accredited ombud?

The code is there to streamline the mechanisms for dealing with consumer complaints. Having a code and ombud can mean that industry members are released from the responsibility to deal with serious consumer complaints, which are instead channelled to an ombud, who is able to deal with consumers in a legally compliant, authoritative and consistent manner. The ombud knows and understands the industry, and the challenges faced by industry players.

  • The code would have the added benefit of softening the impact of the Consumer Protection Act on the industry by customising its provisions so that they make better sense in an industry’s context.
  • An industry code creates the perception that the industry is legally compliant and sensitive to consumer rights.
  • A code reduces the reputational risk for industry members and for the industry as a whole, since consumers are less like to resort to the press with complaints if their perception is that their concerns are being adequately addressed.
  • Resolving consumer complaints in accordance with a code is cheaper for both consumer and supplier because legal costs can be avoided.
  • The process can incorporate an industry code under the Protection of Personal Information Act- another law which will soon pose substantial legal, financial and reputational risk to any industry.
  • The entire complaints process can be conducted online, so that all the role-players have access to the latest documentation, and the website can be used as a marketing tool once the code is ready.
  • Value-added components can include complaints documentation which have undergone usability testing, training for industry members on avoiding the risks posed by non-compliance and user-friendly guidelines or manuals.

The concept of an industry code is not new. Many voluntary industry codes already exist, for example those of WASPA, the DMA etc. and there is plenty of international precedent for using industry codes effectively.

As consumers become more aware of their rights, the benefit of having an industry code and the positive image it exudes, becomes ever more important for suppliers. If you are interested in undertaking such a project, please feel free to approach us for a quotation.

Authors: Elizabeth de Stadler of Novation Consulting and Trudie Broekmann

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