The effort by the Treasury and the Institute of Certified Public Accountants of Kenya (ICPAK) to introduce minimum fees for advisory services may end up doing more harm than good down the road.
Kenya’s economy remains liberalised and pricing goods and services is based on demand and supply.
This is why in 2015 the Competition Authority of Kenya (CAK) raised objections to ICPAK’s request to be exempted from competition rules so that it can set minimum professional fees for accounting services.
The effort by the Treasury and the Institute of Certified Public Accountants of Kenya (ICPAK) to introduce minimum fees for advisory services may end up doing more harm than good down the road.
Kenya’s economy remains liberalised and pricing goods and services is based on demand and supply. This is why in 2015 the Competition Authority of Kenya (CAK) raised objections to ICPAK’s request to be exempted from competition rules so that it can set minimum professional fees for accounting services.
The CAK’s warning that this would harm competition, stifle innovation in the sector and raise accounting costs beyond the reach of many customers still holds today.
In many other sectors, experiments with prescribing charges have not worked. The sheer range of services and the unique needs of each customer mean that a uniform charge may not work.
There are bound to be instances when the customers will feel overcharged based on the nature of the service sought, which will only lead to them seeking help from unqualified practitioners at great harm to both themselves and the accounting profession as a whole.
More importantly, allowing these regulations to pass will significantly raise the cost of compliance and doing business, especially for small businesses for whom every coin counts.
Accountants hold the position that setting minimum fees will help reduce undercutting that has bedevilled the sector, and also promote ethics in the conduct of their business.
They also see it as key to protecting them from exploitationt. Given the arguments for and against the minimum charges, it therefore behoves the Treasury to do proper consultations before gazetting the rules.
It may well be that a hard price floor is not the solution, going by the previous concerns raised by the competitions body.
A price guide might be more useful in this situation, one that will give the practitioners and those seeking their services an indication of a fair charge to work with, combined with increased surveillance and monitoring to weed out rogue practitioners who have been undercutting their professional peers.
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