The Consumer Protection Act has a major impact on the way transporters communicate their services to customers and the way their standard trading terms and conditions are drawn to the attention of the customer to ensure they are clearly understood from an insurance perspective.
The Act will mean that, in the case of transporters, their standard trading terms and conditions can no longer absolve them from liability and responsibility for cargo unless this has been properly disclosed to customers in plain language and that the conditions are fair, just and reasonable.
Currently, transporters offer insurance cover for goods being shipped or transported and collect insurance premiums. In order to do so, they are required to be licensed as an authorised financial services provider.
Some transporters who offer insurance and collect premiums have allegedly been registering themselves as a representative of an existing authorised financial services provider, performing intermediary services and providing advice, for example, as an insurance broker. This may increase the risk of not providing ‘proper’ advice in respect of insurance cover for goods transported as their business is not one of insurance, but one of a logistical nature. This scenario potentially exposes customers seeking to be indemnified for loss and/or damage to their goods.
In fact. some transporters are not insured at all, passing all the risk to the customer as their standard trading terms and conditions either absolve them from all liability or limit their liability. Some also do not provide the customer with policy documents outlining the rates, terms and conditions in exchange for the premium paid.
In other words, should the customer not insure his own goods, he has little or no opportunity to recover the loss or damage.
Customers are entitled to see a copy of the FAIS (Financial Advisory and Intermediary Services Act) licence issued by the Financial Services Board (FSB) held by the transporter, and have the right under FAIS to be properly informed and advised of the insurance cover given and to be provided with a policy document outlining the rates terms and conditions in exchange for the premium they receive.
Under the Consumer Protection Act, any limitation of liability imposed by transporters and agents needs to be properly disclosed to the customer in a language that is simple enough for the customer to understand, thereby making customers aware of the risk implications and the customer needs to procure the necessary insurance from an authorised financial services provider. For those transporters who do already use an authorised financial services provider such as Aon, there is a need to re-assess their liabilities taking into account their Limit of Liability, under the CPA. This will almost certainly require a re-draft of their policy wordings. Adding extensions to an existing policy will not suffice.
Moreover, insurers are expected to insist on more extensive information regarding a business to enable them to accurately assess the risk and here, too, the transporter will have to seek expert input.
The Act has vast implications for all businesses whether they are involved as suppliers, importers, distributors and manufacturers or even service providers and in every instance transport is an element of the associated liabilities.
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