CAP calls for a single updated and comprehensive law on auctions

Auctions have been carried out since the country was under the British rule and the laws regarding auctions have generally remained unchanged. It is time we bring the auction laws to the 21st century for the benefit of all parties concerned especially the bidders (buyers).
Currently the auction business is governed by the 86 year old Auction Sales Enactment F.M.S. Cap. 81 (No. 2 of 1929) and the slightly younger National Land Code of 1965.

The 1929 Enactment has 13 sections and is only four pages long covers very briefly 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 once again the state laws predate merdeka days with the exception of Sarawak’s 1957 Miscellaneous Licenses (Auctioneer and Values) Regulations, For example 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.

The National Land Code 1965 gives banks the right to foreclose on properties of borrowers who have defaulted on their loans. In other words the banks can sell these properties through public auctions to recover their loans. It lays down the statutory rules that banks have to comply with before the properties can be auctioned.

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.
Some of our recommendations are-

• Place the auctioning industry under the purview of the federal government. All auctioneer’s licenses should be issued by the federal government and a registrar of auctioneers should be set up;

• An Auctioneer’s Board should be set up to enable bidders to complain about rogue auctioneers;

• Penalties for breaking the law should be high enough to act as deterrent;

• To lift the professionalism of auctioneers, all licensed auctioneers must attend specially tailored courses and pass the required examinations;

• All types of auctions including online auctions should be covered under the Act.

It should be clearly stated that auctions carried out private sellers are also covered;

• Steps should be drawn up to prevent unsavoury practices like bid rigging. Bid rigging occurs when bidders agree among themselves to eliminate competition in the procurement process thereby denying the public a fair price;

• Have a standard Condition of Sale (for property with titles) and Proclamation of Sale (for properties without individual title/strata).
For example having different terms and conditions in the Condition of Sale and Proclamation of Sale on unpaid bills like quit rent, assessment, maintenance charges, and utility bills confuses bidders. In some cases the unpaid bills are borne by the bank and in other cases they are borne wholly by the buyer. The unpaid bills may run into tens of thousands and it adds to the cost of the purchase.

In the standardised version it is proposed the bank will bear all unpaid bills and auctioneer’s fees as part of its cost of doing business. When a property is being auctioned, the borrower is already financial difficulties. He should not be further saddled with the auctioneer’s fees;

• Standardise the maximum commission that auctioneers may charge. A limit on the maximum chargeable fees will also allow competition;

• Introduce a standardised format for auction advertisements to ensure that they are informative and transparent. It has been claimed that auctioneers are sometimes not providing enough details about the auctions. Interested bidders are then forced to pay to get more detailed information.

Press Statement, 29 September 2015