Consumer Protection Act puts whole supply chain at risk

Transport and logistics operators are at risk of being held liable for any injury or damage arising from the sale of a defective or faulty product that they were responsible for transporting, once the Consumer Protection Act (CPA) comes into force in April this year. That is the warning from Michelle Ravenscroft, head of financial institutions and professional practices at Aon South Africa. She is supported by PricewaterhouseCoopers, which in its brief on the new Act states that any “supplier of services, who in conjunction with the performance of those services, applies, supplies, installs or provides access to any goods, must be regarded as a supplier of those goods to the consumer”. If more than one person or company is liable, the liability is joint and several with other businesses in the supply chain. “Businesses that form part of a supply and/or goods and services channel need to re-visit their current risk management policies and cover,” says Ravenscroft. Up to now distributors have avoided liability because they are not involved in the actual manufacturing process of the product. “It is vital that retailers and wholesalers alike impose additional obligations on their suppliers in light of their mounting accountabilities in terms of the CPA,” she says. “The CPA fundamentally changes the way in which business is conducted in South Africa,” says PwC. One of the effects will be on stockholding, according to Deloitte. “The Act introduces an automatic six-month warranty on all goods sold but the nature of the warranty is even more interesting, as it allows the consumer the choice of having the goods replaced, repaired or refunded. “This warranty will have significant implications for business, with farreaching financial and stockholding implications for all organisations involved in supply chain,” the company predicts.