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Indonesia: Regulation on Financial Services Adopted

(Aug. 22, 2013)

Muliaman D. Hadad, the head of Indonesia’s Financial Services Authority (Otoritas Jasa Keuangan, or OJK), announced at a press conference on July 30, 2013, that the country’s first regulation to protect financial services consumers has been issued. The new rules cover banks, insurance companies, and providers of investment services. The regulation was introduced following many reports of investment scams that have resulted in the loss of billions of rupiah, the Indonesian currency. (First OJK Regulation Increases Customer Protection,JAKARTA POST (July 31, 2013); OJK website [in Indonesian] (last visited July 31, 2013).)

According to Hadad, the regulation establishes that financial institutions must be transparent, fair, confidential, reliable, and protective of data safety. He added that “[t]he regulation is to protect the interests of both consumers in the financial service sector and consumers generally, and at the same time support the growth of the financial services industry and institutions.” (First OJK Regulation Increases Customer Protection, supra.)

In addition, the regulation calls for internal controls within companies that provide financial services, including a requirement that within one year companies establish reporting and monitoring systems for customer problems. The regulation, which comes into force next year, also has provisions on how the OJK will handle consumer complaints and on sanctions for noncompliance. (Id.) Hadad noted that existing consumer protection rules will remain in place until the new regulation comes into effect. Kusumaningtuti Soetiono, the Commissioner for Consumer Education and Protection of the OJK, stated that the agency would help resolve complaints in cases initiated both before and after the new regulation was issued. (Id.)

The Association of General Insurance Companies welcomed the new regulation. A spokesman for the group recommended that clear guidelines for the implementation of the regulation be issued. (Id.)