The High Court has ruled that banks and financial institutions cannot be subjected to disciplinary action by the Auctioneers Licensing Board for conducting auction-related activities without licences, dealing a blow to professional auctioneers fighting to monopolise asset recovery services.
In a ruling that limits the disciplinary powers of professional boards and protects the financial sector from dual regulation, the court emphasised that the board’s mandate only covers licensed auctioneers, not banks regulated by the Central Bank of Kenya (CBK).
The court overturned a decision by the Auctioneers Licensing Board, which had sought to penalise Co-operative Bank of Kenya and several other lenders for allegedly engaging in auctioneering without proper licensing.
The judgment clarifies that only licensed auctioneers — not banks — fall under the board’s regulatory purview, setting back professional auctioneers' arguments that lenders have encroached on their exclusive domain.
Kensap complaint
The case arose from a complaint made in February 2023 by the Kenya National Society of Professional Auctioneers (Kensap), who accused banks of conducting repossessions and auctions without auctioneering licences, thereby violating Section 4(2) of the Auctioneers Act.
Kensap argued that publicly advertising auction sales and conducting repossession exercises are activities reserved for licensed auctioneers under the Auctioneers Act.
The complaint arose from an auction advertisement published in the Daily Nation by the Co-Operative Bank concerning the sale of repossessed property.
Kensap contended that, by engaging in the auction business, the financial institutions had subjected themselves to the jurisdiction of the Auctioneers Licensing Board.
In a November 2024 ruling, the board concurred with Kensap and dismissed Co-operative Bank’s objection, asserting jurisdiction over the matter.
Disciplining an unqualified person
This prompted an appeal to the High Court, which overturned that decision, declaring that the board erred fundamentally.
“Just as an unqualified person posing as a doctor cannot face medical council sanctions, banks, (regulated by the Central Bank) cannot answer to auctioneers’ tribunals,” said the court.
The court held that the Auctioneers Licensing Board lacks authority over banks, as they are governed by CBK regulations, not the Auctioneers Act.
It likened the situation to disciplining an unqualified person practicing law before the Advocates Disciplinary Tribunal, an impossibility since tribunals only regulate licensed professionals.
The judgment affirmed that if banks engage in unlicensed auctioneering, the proper recourse is criminal prosecution under Section 9(2) of the Auctioneers Act—not disciplinary action by the board.
Penalties under this section include fines of up to Sh100,000 or imprisonment for up to two years.
The court found similarities between this case and a 2022 dispute involving the Kenya Bankers Association, in which it was ruled that complaints against unlicensed auctioneering must be pursued criminally, not administratively.
The ruling reinforces banks’ ability to conduct auctions and repossessions without fear of disciplinary action from the Auctioneers Board. It also weakens Kensap’s ability to regulate auctioneering activities, potentially reducing demand for licensed auctioneers in bank-led recoveries.
Festering issue
While the judgment settles the jurisdictional question, it leaves unresolved whether banks’ auction activities constitute illegal auctioneering.
The court acknowledged this ambiguity stating that “the dispute remains a festering issue” requiring legislative or judicial clarity.
“The issue as to whether the appellant (Co-operative Bank) can continue to render services that are exclusively reserved for auctioneers (as held out by the Kenya National Society of Professional Auctioneers) still largely remains unresolved. It is a question that will continue to vex the licensed auctioneers while causing anxiety and apprehension to parties who render the services that the auctioneering body complains of,” said the trial judge.
Prosecutors must mostly pursue criminal complaints against entities engaging in unlicensed auctions, though such prosecutions remain rare.
