The Consumer Protection Act meets the Service Level Agreement

With the introduction of the Consumer Protection Act, South Africans become some of the most protected from unfair or unethical business practices.

May 24, 2011

But what impact, if any, does this have on the interactions of complex businesses such as those providing information and communication technology (ICT) services? That’s a question to which Ashika Kalyan, chief marketing officer (CMO) at Business Connexion, provides a considered response.

“The short answer is that the CPA is likely to have a limited effect on such businesses in practice,” she says.

The spirit, if not letter, of the CPA is that it seeks to align various preceding laws which provide consumer redress into a comprehensive piece of legislation. The Department of Trade and Industry notes its primary purpose as the prevention of exploitation or harm to consumers by recognising and consolidating consumer rights, establishing mechanisms for the enforcement of rights, prohibiting certain conduct and placing obligations, such as for acceptable quality, on suppliers of goods or services.

Kalyan notes that services companies are expressly included under the terms of the Act. “In short, every transaction occurring within the Republic is affected as well as the marketing and supply of goods and services.”

But she makes an important distinction. “The term ‘services companies’ is very broad; carpet cleaning and gardening are examples of services which require a very simple engagement. The provision of managed ICT services, on the other hand, is a highly complex engagement.”

She believes the spirit of the law as it applies to services companies runs to promises being made but not met. That’s why ICT services companies may already be very well aligned to the requirements of the CPA.

“The differentiation is that when providing ICT services, any promises which are made are reduced to writing. The quality of service, the details of delivery and even the penalties which may be due should those promises not materialise, are all contained within the Service Level Agreement,” Kalyan explains. The SLA, she continues, contains the minutiae of every professional engagement. “It is the bible which governs all aspects of the relationship, the value to be conferred and the monies to be paid.”

And while the CPA provides for a ‘cooling off’ period in which contracts may be cancelled by a customer experiencing ‘buyer’s remorse’, Kalyan notes further than ICT services contracts are not entered into lightly.

“The sales cycle is lengthy, the contracts exhaustively detailed and the required services are often critical to support the business processes or models of the client. An immense amount of work goes into identifying, procuring, configuring and deploying enterprise ICT services; these are not simple transactions where one party can fool the other,’ she says.

The presence of such comprehensive documentation in the engagements of ICT (and other) services companies may go a long way to ensuring compliance with the CPA, but Kalyan stresses that this does not provide the proverbial ‘get out of jail free’ card.

“Naturally, the legal teams of such companies are taking cognisance of the new legislation and assessing the possibilities of exposure which may result; if necessary, amendments will be made to the way in which customers are engaged and managed to ensure compliance,” she says.

“But it remains a strong likelihood that the providers of complex services – and their clients – have, through necessity, largely complied with the CPA before it’s introduction.”