WARNING

Professional bodies setting minimum fees risk Sh10m fine - CAK

CAK boss Wang’ombe Kariuki said the move is meant to extinguish competition among members of the professional associations to the detriment of clients.

In Summary
  • In their fresh bid, accountants now want to be allowed to charge services on an hourly basis with additional compensations.
  • Early last month, MPs backed changes to the law that will grant the State powers to control medical bills and doctors’ fees
Competition Authority of Kenya Director General Kariuki Wang'ombe.
Competition Authority of Kenya Director General Kariuki Wang'ombe.
Image: FILE

The competition watchdog has faulted the move by professional associations setting minimum chargeable fees for their members.

In a statement, the Competition Authority of Kenya (CAK)’s warned that professional bodies found liable of fixing service prices for its members will be  fined Sh10 million or five year imprisonment or both.

“Notwithstanding the aforementioned provision of the Act, the authority would like to remind professional service associations to be cognisant of Section 29 of the Competition Act,''CAK boss Wang’ombe Kariuki said. 

It provides that a professional association whose rules contain a restriction that has the effect of preventing, distorting, or lessening competition in a market shall apply in writing in the prescribed manner to the authority for an exemption. 

Kariuki noted that the move is only meant to extinguish competition among members of the professional associations to the detriment of clients.

Although he did not single out some of the associations violating the Competition Act, the warning is coming a month after the National Treasury welcomed accountants to give fresh suggestions on proposed minimum fees. 

In 2015, accountant through their umbrella body, the Institute of Certified Public Accountants of Kenya (ICPAK),  tried to push for exemption from the competition rules and sought to be allowed to set a minimum consultancy fee for accounting services.

The request was denied by the the anti-competition watchdog which said fixing prices for audit services will eliminate the incentive to offer quality services.

In their fresh bid, accountants now want to be allowed to charge services on an hourly basis with additional compensations.

ICPAK wants those seeking to apply for KRA PINs to part with Sh2,000 for taking instruction from a tax agent, filing returns or even obtaining a tax compliance certificate (TCC) and other tax services.

The accountants body also want businesses to part with Sh7,500 for the same services. 

National Treasury  Cabinet Secretary Ukur Yatani last month termed the proposal by ICPAK as progressive, saying the regulations are positive on the practice of the accountancy profession in Kenya and beyond.

The law prohibits associations from making decisions or engaging in concerted practices which directly fix purchases or selling prices or any other trading conditions in relation to the provision of goods and services.

“It is the authority’s considered opinion that price fixing by professional associations extinguish competition with no plausible public benefits,” said CAK Director General Wang’ombe Kariuki.

Setting such fee guidelines requires the approval of the CAK.

ICPAK has dismissed CAK's  warning as double standard, saying other professional bodies like Law Society Of Kenya have minimum fees for members. 

Speaking to the Star on phone, ICPAK CEO Edwin Makori said Section 8 of Accountants Act gives the lobby mandate to set those fees.

"Both ICPAK  and CAK are under National Treasury. We chose negotiation unlike our sibling who is all combative,'' Makori said. 

Early last month, MPs backed changes to the law that will grant the State powers to control medical bills and doctors’ fees, a move aimed at stemming the surge in hospital expenses.

The National Assembly Committee on Health approved the proposed amendments to the Health Act 2017 that will see medical charges determined and capped by an 11-member council that includes the Principal Secretary for Health and the Attorney-General.

This move has attracted opposition from the Kenya Medical Practitioners and Dentist Union .