PERFORMANCE AUDIT ? DEPARTMENT OF CONSUMER AFFAIRS

The Report "Performance Audit – Department of Consumer Affairs" has been submitted to the Honourable Speaker for presentation in the House of Representatives in accordance with sub-paragraph 8(b) of the First Schedule of the Auditor General and National Audit Office Act, 1997.

The audit focused on the main activities undertaken by the Department:

investigating consumer complaints,

assisting the Consumer Claims Tribunal,

processing complaints received through the Freephone 120 service and further increase consumer awareness. It also sought to evaluate whether the Department was operating at acceptable levels of efficiency.

Audit Issues

A study was made by the National Audit Office of 766 complaints received during 1999 by the Department of Consumer Affairs from consumers seeking redress in respect of the purchasing and hiring of goods and services. The study revealed that 62% of cases were settled in favour of consumers while 13% of cases were settled in favour of traders. The remaining cases were either dropped (20%) or settled amicably by the litigating parties themselves (5%). The average period taken by the Department to settle complaints spanned 48 days. Staff constraints and lack of co-operation by the litigating parties are considered to be the main elements hindering the Department from resolving cases more expeditiously.

Out of a sample of 255 cases processed by the Consumer Claims Tribunal during the period January 1999 to May 2000, 59% were settled in favour of the consumer, 8% were decided in favour of the trader whilst 15% were settled amicably. These rates are only marginally different from those registered in the cases administered by the Department. It was established that the average duration of a case settlement amounted to 199 days. The principle that consumers are entitled to redress within a reasonable period is not always apparent.

The Department received 1696 complaints on its Freephone 120 service which were forwarded to relative government entities and departments for verification and settlement. As at end May 2000, only 49% of all complaints received during 1999 had been concluded. This settlement rate indicates that generally, Government entities may not be allocating adequate priority to deal with these complaints.

The average cost incurred by the Department to investigate complaints amounted to Lm57.58 per case. The average cost to process complaints through the Consumer Claims Tribunal worked out at Lm98.79. Complaints received on behalf of other Government entities through the Freephone 120 cost the Department Lm12. 52 per case. The average costs per function incurred by the Department to provide its various services are considered as high. However, these costly services contribute to social benefits in terms of consumer satisfaction and encourage a fair trading environment.

Developments

As a result of an operations review within the Ministry of Economic Affairs, the Ministry has been reorganised as from January 2001. Functions previously performed by the Department of Consumer Affairs and the Office of Fair Competition have now been amalgamated within the newly established Consumer and Competition Division.

Functions related to consumer complaints (including Freephone 120) and consumer awareness now pertain to the Information and Client Affairs Directorate. The Consumers Claims Tribunal and Monitoring of Trading Practices have been taken over by other Directorates within the Consumer and Competition Division.

Recommendations

The National Audit Office recommends that the newly set-up Consumer and Competition Division should adequately train its staff and restructure itself in order to enhance promotion of consumer awareness. Higher efficiency and effectiveness should result following restructuring.