Automotive code of conduct promotes fair business practices

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On 7 February 2014 a draft code regulating the resolution of disputes in the automotive industry was published for comment. The code applies to the entire automotive industry, including manufacturers, distributors, importers and the like. In line with the objectives of the Consumer Protection Act, the code is geared at consumer protection, supplier guidance and fair business practice.

The code places an obligation on all individuals and business in the automotive industry to promote fair business practices and to protect consumers from conduct which is unconscionable or deceptive, as well as from unfair contractual terms and trade practices.

Obligation on suppliers

The code also imposes an obligation on suppliers to establish an internal complaints procedure as a forum for consumer complaints to be dealt with internally as well as in terms of the Motor Industry Ombudsman of South Africa (MIOSA), which established the MIOSA scheme to resolve disputes arising in the industry. Although MIOSA has been in existence since 2001, the code now accredits the scheme and broadens the scope of businesses and individuals who fall within its reach. In terms of MIOSA, any person who stands in the position of a consumer in a consumer-supplier relationship in the motor industry will be entitled to make use of the scheme.

The procedure to be followed where a consumer has a complaint against a supplier is seemingly simple. Firstly, try to resolve the issue with the supplier. If the supplier and the consumer are unable to resolve the dispute or the supplier ignores the complaint for more than five days, the next port of call may be MIOSA. So long as the complaint is no more than three years old and the consumer has given the supplier ten days prior notice that the dispute is on-going, he will be entitled to refer the complaint to MIOSA.

Response period

Once the complaint has been filed with MIOSA, the supplier will have five days to respond or provide a reasonable response for his failure to so. MIOSA is entitled to request information before deciding either to refer the complaint to an independent supplier to resolve the complaint or do so itself either by way of mediation or adjudication. If the consumer still isn't happy he can appeal the decision to the National Consumer Commission and Tribunal.

While open for public comment, both the code and the scheme faced criticism, including the apparent unfairness regarding the fact that complaints must be kept confidential until resolved and the fact that any oral hearing or interpreter required is for the expense of the parties themselves. Also, there is a right to legal representation; the concern here being that unrepresented consumers may be intimidated. There are also concerns regarding the procedures envisaged on the basis that these procedures are onerous on consumers.