Our sister organisation the Committee of Advertising Practice (CAP) has today announced new guidance in relation to auction lots. The guidance focuses on the use of guide prices and how to display information about non-optional fees.
This follows a project we carried out in response to a consumer complaint about the way auction catalogues referred to buyer’s premiums. We consulted several stakeholders in the industry, and have arrived at a position on the way such fees should be displayed in order to stick to the CAP Code. The new CAP guidance is intended to reflect that position.
A guide price represents the seller’s minimum expectation. It is not a valuation, and the eventual sale price might differ depending on the level of interest.
The guide price is an important piece of information for consumers because it indicates the price they might expect to pay, so they can estimate a budget for related costs, such as insurance. While the final price paid at auction may be subject to non-optional fees, it may not be practical to include those fees in the guide price because the final selling price cannot be determined in advance.
However, non-optional fees are likely to be material information that consumers require to make an informed decision. We will likely require ads to provide a clear reference to the existence of relevant fees immediately next to the guide price.
There are a range of models used to calculate fees. For example, some depend on the hammer price, some are only applicable in certain circumstances or above a certain value, and others apply to some buyers but not others. It could therefore become complicated to present fees correctly. The guidance sets out various different scenarios in order to address this.
In complex areas, it would not be practical for specific information about how fees are calculated to accompany every guide price. The guidance also addresses that issue.
You can read the guidance here.