Borrowers on Edge as Banks Gain Power to Auction Without Licensed Agents

Kenya, 1 November 2025 - A High Court ruling has redrawn Kenya’s auction map, siding with commercial banks in their long-running turf war with licensed auctioneers.

In a decision that could reshape asset recovery and debt-collection practices, Justice John Chigiti declared that the Auctioneers Licensing Board (ALB) lacks disciplinary power over banks and credit firms that conduct asset auctions.

The court held that while licensed auctioneers remain bound by the Auctioneers Act, financial institutions fall under the purview of the Central Bank of Kenya (CBK) and other sector regulators.

The ruling followed a petition by the Kenya National Society of Professional Auctioneers (KENSAP), which had accused banks of “usurping licensed roles” by auctioning repossessed assets without proper authorization.

KENSAP argued that banks’ actions contravened Section 4(2) of the Auctioneers Act, which requires any person carrying out auctioneering to be licensed by the Board.

Justice Chigiti disagreed, ruling that banks are not directly regulated by the Board and therefore cannot be disciplined under its framework.

“Where banks engage in auctioneering without a licence, the recourse lies in criminal prosecution, not disciplinary action by the Board,” the court noted, referring to Section 9(2) of the Act, which prescribes fines of up to KSh 100,000 or two-year imprisonment for offenders.

Key Considerations

The ruling marks a major win for banks, freeing them from what they called “double regulation.”

However, it also deepens tensions with auctioneers, who fear being sidelined as lenders internalize asset-recovery processes.

Kenya’s auctioneering sector, worth an estimated KSh 15 billion annually, according to the Auctioneers Board’s 2024 report, has struggled amid rising competition from in-house bank teams and unlicensed operators.

“This decision essentially opens the floodgates for banks to auction directly without engaging licensed professionals,” said KENSAP Chairperson Isaac Ndung’u in comments.

“It weakens the spirit of the law and exposes borrowers to abuse.”

Banks, however, hailed the judgment as “a rational clarification.” saying that the ruling “saves time and cost” in recovering non-performing loans, which rose to 15.3% of gross loans in mid-2025, per Central Bank of Kenya (CBK) data.

Where and How did this Battle get here?

The battle between banks and auctioneers dates back over a decade, triggered by recurring disputes over who holds authority to dispose of repossessed property.

With bad loans on the rise and real-estate values fluctuating, lenders argue they must act fast to manage credit risk, a process slowed down by third-party intermediaries.

Still, industry analysts warn that direct bank auctions could erode transparency, since auctioneers’ licensing ensures accountability and fair valuation.

“Without clear oversight, borrowers risk losing assets below market price,” said financial lawyer Jane Mwangi in an interview.

The government has yet to signal whether it plans legislative amendments to close the regulatory gap. For now, the hammer remains in motion, and the auction floor, once the preserve of licensed professionals, is quickly becoming new ground for Kenya’s lenders.