SECOND-HAND GOODS BILL [B2 - 2008]

1. SECOND-HAND GOODS BILL [B2 - 2008] Presentation to the Parliamentary Portfolio Committee on Safety and Security by The Retail Motor Industry Organisation on 5 March 2008

2. Introduction Retail Motor Industry Organisation (RMI) Presentation Team • Gary McCraw – Director and Organisational Secretary of the RMI; • Pieter Smit – Group Legal Advisor for McCarthy Limited; and • Graeme Nicholson - Compliance Manager for Associated Motor Holdings (Pty) Ltd

3. Introduction RMI represents 8000 establishments in the retail and wholesale motor industry, includes the interests of: • Component remanufactures; • Rebuilders of petrol and diesel engines; • Motorcycle and accessory dealers; • Independent workshops, specialist outlets and fast fitment centres; • Parts and equipment wholesalers and retailers; • Motor vehicle, commercial vehicle and tractor dealers; • Roadworthy vehicle test centres; • Diesel fuel injection workshop; • Collision repair and vehicle finishing workshop; • Fuel station operators; • Truck and bus body builders; • Retail tyre outlets, retreaders and fitment centres; and • Informal traders with fixed address in the automotive market.

4. Opening Comments Current regulatory framework: The business and operational processes within motor vehicle dealerships - highly regulated via other legislation and agreements: • Main Agreement for the Motor Industry; • Financial Advisory & Intermediary Services Act; • Financial Intelligence Centre Act of 2001; • National Credit Act No 24 of 2005; • National Road Traffic Act of 1996 and the National Road Traffic Regulations of 1999 as amend; • Vat Act in particular Section 20(8) and 16(3); • Companies Act; • Consumer Protect Bill; • The current Secondhand Goods Act; • Franchise agreements and operating standards;

5. Opening Comments • Concern over increased administration, record keeping and process costs; with extremely punitive measures for non-compliance, and the potential offences are numerous • Duplication of record keeping requirements • Secondhand Goods Bill (B2-2008) should be applied in complimentary fashion to FAIS, FICA etc and not in isolation; • Reporting and compliance should be consolidated as most dictate the same information for reporting just in different formats • Suggested approach is to provide a self regulating environment based on industry body membership with the necessary codes of conduct and governance in place to ensure that regulatory objectives are achieved by enhancing existing risk and compliance monitoring structures (See attached discussion document on structuring of entities)

6. Registration Obligation to register (S3) • Business is liable under existing legislation for the actions of employees • Companies Act regulates accountability of senior management for compliance breaches • Unnecessary to attach liability and obligations to individuals who would already be liable under existing legislation Application for registration (S4) • Issue regarding the registration of individual premises where entity has multiple premises • Suggest Group registration vs registration of individual premises (conflict with S6(c) which indicates that all premises have to be listed as part of application) Information on application by natural person (S5(2) & S6 (1),(2)) • Suggest limiting the requirement to include only the senior management / owners of the business (Issue wrt multiple managers in dealer context) • Application of individual management personal requirements to apply going forward only (potential for numerous retrenchments etc. if applied retrospectively) • Businesses will have their own staff records for other managers • Other management records are not of relevance to the registration process • Suggest onus placed on Entity to conduct checks on relevant senior managers as is the practice under FAIS for persons operating as Key Individuals • Fingerprinting and processing timelines (Bureau checks can take up to 8 months and impact on recruitment)

7. Certificates and Record-Keeping Certificates • Management and premise details on certificates impractical from an administrative perspective • Certificates for storage locations eg. warehouses are impractical and unnecessary • Process for notification of changes to registration details and withdrawal of existing certificates • Suggest certificate issued in the name of the main entity and a separate register maintained internally of all premises and associated senior management • Transfer of Certificates • Concerns regarding processing delays and potential business impacts • Temporary registration to be provided if transferring to an existing registered entity, subject to final approval and reissue Register of Records • Printing of records from electronic systems on a daily basis is impractical and not cost-effective • Certain records eg. ID etc. for parties selling or buying the goods should be limited based on a threshold value of the goods

8. Storage and modification of goods Storage • Issue regarding separate goods location during initial 7 day period • Space limitations do not allow for separate storage • Goods can currently be identified at the dealership through existing records eg. Vin and chassis numbers Modification of goods • Goods need to be prepared for resale purposes – delays have substantial cash flow implications for dealerships • Suggest that certain changes be allowed during this initial period, provided they do not change any fundamental identification criteria eg. colour, engines etc. • Details could be defined and included in regulations

9. General Inspection powers of the police • These should be limited to standard search and seizure processes as per existing legislative requirements with no additional powers (need to standardize the process followed for such occurrences across all legislation) Penalties • Current wording implies that minor breaches or oversights are treated as substantive and could have the unintended consequence of jeopardizing the business if not applied correctly by well informed and trained police officials and related staff members • It is suggested that the penalties be reviewed under the different sections based on the nature of the offences that are most likely to occur • Ring-fencing of breaches to prevent cancellation of group registration

10. Closing Comments • We appeal that consideration be give to exclude motor vehicle dealers from the Secondhand Goods Bill – current regulatory environment provides sufficient control • If this request cannot be accommodated, then we respectfully request that the submissions placed before the committee enjoy further discussion and comment to ensure the viability of one of the largest industry sectors • Regulation dependency – Act and regulations to be viewed as a whole Thank you