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Sunday, October 4, 2015

CAP: Clean up auction business with new law

Time to replace colonial-era laws for the Internet age, says Idris
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GEORGE TOWN: The federal government has been urged to enact a single new and comprehensive law to govern auctions, to replace colonial-era legislation.
The Consumers Association of Penang said the colonial-era laws on auctions had generally remained unchanged and it was time to update them for the 21st century.
“In an age where auctions can be carried out over the internet there is a need to have legislation that reflects the present reality. This means having one encompassing law on the industry’s practices to ensure bidders are not disadvantaged, to raise the professionalism of auctioneers and to generally make the industry more transparent,” said CAP president SM Mohamad Idris.
CAP wants the federal government to take charge of the auction industry, issue the auctioneers licence and set up a registrar of auctioneers. He proposed that an auctioneer board be established to enable bidders to complain about rogue auctioneers.
The auction business is governed by the 86-year-old Auction Sales Enactment 1929 and also the National Land Code of 1965.
The 1929 Enactment has 13 sections and is only four pages long, and very briefly covers issues like licensing, notice of sale, details of auctioneer to be displayed, what auctioneer may buy, details of bidding agent, a separate contract of sale for every lot auctioned, completion of sale, penalties, power to make rules and sales under court order.
The renewal of the auctioneer’s license is still RM10 and the fine for breaking the law stands at RM100.
Auction licences are issued by the individual states and predate independence. Kelantan has its 1930 Auction Sales Enactment; Selangor, Negri Sembilan and Pahang have their 1926 Auction Sales Rules; the Straits Settlements of Penang and Malacca come under 1906 Auctioneers Licences Ordinance; while Sarawak has the Miscellaneous Licenses (Auctioneer and Values) Regulations 1957.
The National Land Code 1965 gives banks the right to foreclose on properties of borrowers who have defaulted on their loans allowing banks to sell these properties by public auction to recover their loans, Idris said.
CAP called for higher penalties as a deterrent against breaking the law; prescribed courses and examinations for licensed auctioneers; expansion of coverage to all types of auctions including online auctions and auctions by private sellers; a standard Condition of Sale or Proclamation of Sale; measures to prevent unsavoury practices such as bid rigging, when bidders agree among themselves to eliminate competition thereby denying the public a fair price.
Idris said buyers were confused because of different conditions on matters such as unpaid quit rent, assessment, maintenance charges, and utility bills. In some cases the unpaid bills are borne by the bank and in other cases they are borne wholly by the buyer.
He said the unpaid bills may run into tens of thousands and raised the cost of the purchase. CAP proposed that banks should bear all unpaid bills and auctioneer’s fees as part of their cost of doing business, and a borrower already facing financial difficulties should not be further saddled with auctioneer’s fees when his property is auctioned off.
CAP also called for a standardised maximum commission for auctioneers to allow competition, and a standardised format for auction advertisements to be informative and transparent.

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