Have you received a letter with the subject line “Compulsory Participation in the Consumer Goods and Services Ombud” from Trifecta Capital acting on behalf of the Consumer Goods and Services Ombud? Did the letter tell you that you have to pay a levy, and registration is compulsory for identified entities? Is this a scam? Do you have to pay this levy? Do you have to participate and register?
Unfortunately this is NOT a scam. The Consumer Goods and Services Ombud (CGSO) (headed by Neville Melville) was established in terms of the Consumer Protection Act (CPA) to deal with consumer-related disputes. They are genuine and so is the levy you have to pay. Many people have received the letter. This might not seem fair considering the taxes and other levies you already pay, but such is life.
There is now a new levy on virtually all consumer businesses in South Africa.
Who should pay the levy?
Unfortunately the position is not clear and many people are not sure whether they must pay.
According to the letter from Trifecta Capital “all entities whose business activities fall within the supply chain that provides, markets and/or offers to supply goods and services to Consumers and the ambit of the CPA, fall within the jurisdiction of the CGSO, unless they belong to an industry that is regulated elsewhere.” It applies to “Consumer Goods and Services Industry Participants“. What does that mean?
The CGSO website (which has many broken links and ambiguities) says “All suppliers in the consumer goods and services industry, including retailers, suppliers, wholesalers, distributors, manufacturers, producers, importers, intermediaries, logistics and supply chain agents.” What does that mean?
Let us break it down. You have to look at how things are defined in the CPA. Goods and services is very broad and includes many things. A consumer is essentially all natural people and any legal person with a turnover of less than R2 million. A supplier is any person who markets any goods or services – basically everyone. So, most businesses market goods or services to consumers and are therefore in the consumer industry and must pay.
But your customers may not be consumers (as defined) and therefore you might think that you do not need to pay. But if you are in the supply chain that eventually provides goods or services to the consumer, you must also pay. The ““supply chain” with respect to any particular goods or services, means the collectivity of all suppliers who directly or indirectly contribute in turn to the ultimate supply of those goods or services to a consumer, whether as a producer, importer, distributor or retailer of goods, or as a service provider“. Most businesses are in a consumer supply chain.
So, virtually all consumer business in South Africa must pay and must comply with the Consumer Goods and Services Industry Code of Conduct.
Who is exempt?
You are exempt and do not need to pay if:
- the goods or services you provide do not fall within the definitions in the CPA,
- there are no consumers at the end of your supply chain,
- your transactions are not covered by the CPA,
- you are bound by another CPA code prescribed by the Minister,
- you are regulated by other public regulation (like attorneys regulated by the Legal Practice Act),
- a complaint falls within the jurisdiction of another ombud with jurisdiction,
- you are in the automotive industry,
- you provide an electronic communication service, or
- you are an organ of state or financial institution.
So, many organisations might be exempt.
Who has already registered?
About 60 companies, like Discovery, Shoprite, MTN, Pioneer Foods, JD Group and Club Leisure. There are benefits to registering.
How much do you have to pay the Ombud?
The annual levy can be up to R250,000 depending on what your annual turnover is. Only very large entities pay the R250,000. If your turnover is less than R1 million, there is no levy. If your turnover is between R1 million and R5 million you pay R1,500.
|CGSO Group||Turnover Range||Annual Fee|
|Group 1||R3 bil +||R 250,000|
|Group 2||Above R1 bil to R3 bil||R 150,000|
|Group 3||Above R500 mil to R1 bil||R 50,000|
|Group 4||Above R5 mil to R500 mil||R 3,000|
|Group 5||Above R1 mil to R5 mil||R 1 500|
|Group 6||R1 to R1 mil||no cost|
There might also be a special levy.
What happens if you do not pay?
The CGSO will take legal action against you to recover any outstanding levies you owe them. They will also report any non-compliance to the National Consumer Commission so the Commission can investigate.
Who is Trifecta Capital?
The CGSO has appointed Trifecta Capital to help collect the money.
Questions that have arisen
- Does the levy apply to foreign entities?
- What happens if some of your customers are consumers under the CPA and some are not? Would you still need to pay the levy?
How can we help you?
- Give you answers the questions above.
- Help you determine if you are one of the organisations that must pay.
- Help you to motivate to the CGSO why you should be exempt.
- Advise you on issues relating to the CGSO.
- Help you respond to notifications from the Ombud.
- Help you to comply with the Consumer Protection Act.
Simply enquire using the form on the right.