The Sunday Mail
Senior Business Reporter
Following the promulgation of the Consumer Protection Act [Chapter 14:14] last December, giving strength to the protection and promotion of the interests of Zimbabwean consumers, the local pensions industry could find itself more answerable to pensioners.
Pensioners, especially in Zimbabwe, have historically been on the vulnerable side of a pension contract due to imbalances in economic terms, educational levels and bargaining power.
Although pensioners typically have recourse through the Insurance and Pensions Commission (IPEC), which regulates the sector, the new Consumer Protection Act appears to have thrown a spanner in the works:
Said Zimbabwe Association of Pension Funds (ZAPF) director-general Sandra Musevenzo:
“Pensioners are now armed with additional protection against unfair value and bad quality, so it is also in our interest that we need to treat our customers fairly and also look at our services, which is the pension product that we are offering.”
Lawyer Nyasha Munyuru of Muvingi-Mugadza Legal Practitioners, addressing a ZAPF programme last week, said pensions administrators and managers “are now more liable”.
“This particular Act (Consumer Protection Act, Chapter 14:14) is of particular importance to the pensions industry, which provides services, and who also transact with other entities in terms of the investments that they make. The rights provided by this particular Act entitle the pension industry to even approach the courts, through class action, for bad, unreasonable or unfair services.
“The same applies to pensioners as they are armed with additional protection against unfair value and bad decisions or services given by the fund administrators. So this increases the liability of pension fund administrators and managers. Therefore, they need to be more aware of the business decisions that they make.
“Pension funds also have a statutory obligation to inform consumers about any ‘unnatural risks’ associated with the products and services they provide. And by virtue that they provide goods and services, it is assumed by law that you providing a warranty.”
A pension contract is basically a contract under which rights to benefits are obtained by the making of contributions to an occupational pension scheme or to a personal pension scheme, where the contributions are paid to a regulated collective investment scheme.
The new Consumer Protection Act [Chapter 14:14] supersedes the Consumer Contracts Act (Chapter 8:03), and one of the more significant changes is that the new Act broadens the definition of a “consumer” to refer to an individual who purchases “goods” and “services”; it affords the required wide protection to consumers.
By extension, services provided by pension funds are now defined as consumer-oriented services.
To this extent, another legal expert says the new law could complicate the maintenance of a pensions contract.
“In the world of insurance we have a seminal case of Radar Holdings vs Eagle Insurance, and in that case the Consumer Contract Act came up for interpretation and the issue was whether or not a time limit clause in an insurance contract can be deemed to be an unfair provision, and the Supreme Court came up with its position to say that ultimately a consumer must show the oppressive nature of the contractual provision for it to be deemed unfair.
“That was the Consumer Contract Act previously, but now there has been a change, which is to my mind drastic because it actually defines the service that you are offering as a consumer-oriented service. So the question to pension firms is that does this new Act not challenge the status quo of the contractual provisions that the pensions industry has relied on for a very long time? Are we not going to find ourselves in a situation where some of those clauses are going to be challenged? And will this not present problems for the pensions industry going forward?” asked Nobert Phiri, a partner with Muvingi-Mugadza Legal Practitioners.
Zimbabwe has for a long time suffered from the challenge of anemic consumer bodies, but the new consumer law makes provision for enforcement of consumer rights in addition to recourse to courts of law, both civil and criminal.
These include a Consumer Protection Commission, Consumer Protection Advocacy Groups, provision for other consumer protection organisations and consumer protection officers.
Experts say the establishment of a Consumer Protection Commission, which although may appear to play overlapping roles with Zimbabwe’s pensions (and insurance) sector regulator the Insurance and Pensions Commission, will give consumers or pensioners more reprieve.
Said Retired Judge Justice Moses Chinhengo:
“In my view the overlap (between the Consumer Protection Commission and IPEC) cannot be prejudicial for the consumer.
“IPEC has its mandate, which is much wider than that of the Consumer Protection Commission, so the latter is just another channel which pensioners can take their complaints, even though it will have its direct mandate to cater for consumers.”