Weekend Argus (Saturday Edition)
Understanding auction process, consumer rights
AN AUCTION presents an exhilarating opportunity to buy and sell goods at a fair price, whether bidding on a cherished collectible or seeking a valuable commodity.
After the excitement of the chant, the sale is concluded upon the fall of the auctioneers gavel.
However, behind the scenes of the bustling marketplace lies a framework of regulations and consumer protections, ensuring fairness, transparency and integrity in every transaction.
It is watched over by the industry regulator, the South African Institute of Auctioneers (Saia), which ensures legislation and regulations are adhered to and challenged if wrongdoing is suspected.
The auction industry also operates within the ambit of the Consumer Protection Act (CPA), a pivotal legislation safeguarding the rights of consumers and shaping the conduct of businesses across various sectors.
In order to assist consumers to understand their rights, Saia board members Nico Maree and Philip Powell, who have almost 50 years’ service to Saia among them, shed light on how the CPA influences auctions and ensures consumers get the service and products they paid for from auctioneers.
Saia is the industry regulator and is guided by a robust code of conduct and ethics. It upholds industry standards, with meticulous adherence to ethical practices, and ensures smooth governance and administration, which aims to foster trust and confidence among stakeholders.
That is the reason why Maree underscores the critical importance of authenticity and quality assurance in the auction process. Where necessary, the auctioneer may be required to engage appraisers and experts to validate the authenticity and value of valuable items on auction.
The auctions must also ensure compliance with Regulation 22 which mandates written authorisation for asset sales, accompanied by meticulous verification processes to confirm ownership and authenticity.
In instances where discrepancies arise between the purchased item and its description, the CPA offers recourse for buyers.
Maree recounts scenarios where Saia facilitated resolutions, emphasising the importance of dialogue and negotiation to rectify errors.
It is important to note that auctioneers operating under Saia membership are held to stringent standards, ensuring adherence to legal mandates and ethical conduct. However, those who fall outside the auspices of Saia membership may not be held to similarly high standards.
Powell explains the importance of clearly defined mandates, outlining the terms of engagement between buyers, sellers and auctioneers. Mandates delineate crucial aspects such as reserve prices, post-auction negotiations and auctioneer remuneration, fostering transparency and avoiding misunderstandings.
Buyers and sellers are, therefore, urged to familiarise themselves with auction rules and terms to facilitate smooth transactions and pre-empt disputes. The rules should be clearly spelt out in plain and simple language or risk falling foul of CPA requirements.
Powell adds that Saia further aims to avoid disputes through its rigorous commitment to consumer education. This includes extensive outreach initiatives, roadshows, videos, podcast, blogs and other educational materials aimed at consumers and auctioneers.
The organisation’s efforts to demystify the auction process and empower buyers and sellers with knowledge of their rights and responsibilities is a priority. By promoting awareness of regulatory requirements and best practices, Saia aims to cultivate a fair and informed auction ecosystem.
However, Powell cautions that the caveat emptor (let the buyer beware) principles, which means that by necessity goods are sold “as is” or voetstoots, applies. He stresses the importance of consumer diligence in auctions.
While the CPA affords protections to consumers, buyers bear the responsibility of due diligence in assessing the quality and value of goods. Understanding the onus placed on buyers to exercise prudence and familiarity with auction items is paramount in avoiding risks and ensuring satisfactory outcomes.
Remember, auctioneers cannot be expected to warrantee goods that they do not own but are selling on behalf of consignment sellers. Auctioneers can provide only the information shared with them by the seller.
Maree rules familiarisation with the basic rules of auctions and dealing with suitably qualified auctioneers that are Saia-accredited members is a first stop to ensuring success at auctions for buyers and sellers. Auctioneers who are not Saia members should familiarise themselves with the requirements and consider joining the institute which is dedicated to governance, consumer protection and education to foster trust and integrity within the auction industry.