OJK to Issue Circular Letters on Consumer Obligations

Fathan Qorib, Andin Aditya Rahman
 
The Financial Services Authority (OJK) is currently preparing a circular letter to regulate the obligations of consumers of financial services. According to OJK officials, this circular will set out provisions on requiring consumers to act in good faith when using financial services.
 
In addition to this circular, the OJK is also preparing another circular on the obligations of financial service providers. This second circular will require financial service providers to provide true and accurate information about their products and services.
 
“The next two circulars will be issued sometime soon, and will regulate the good faith of consumers and primary provisions on product information that is authentic, clear, and not misleading,” said Anto Prabowo, Director of Consumer Protection Policy Development, in Jakarta on Wednesday.
 
Mr. Prabowo further explained that the circular on good faith by consumers ultimately aims to protect the consumers themselves by requiring consumers to submit accurate information to financial service providers.
 
“Several crimes result from the bad faith of consumers such as exploiting identity cards and policies,” he elaborated.
 
The second circular, on the other hand, primarily intends to prevent financial service providers from misleading consumers. This circular is being issued as financial service providers can at times confuse and mislead consumers.
 
“For example, advertisements stating installments start from this much, and down payments start from that much. In the future this can no longer be done,” Mr. Prabowo asserted.
 
Additionally, the second circular will also prohibit financial service providers from describing themselves with excessive adjectives, such as the strongest bank or healthiest bank, without sufficient supporting data.
 
“Except if they won awards. The public must not be misinformed,” stressed Mr. Prabowo.
 
Old Dogs, New Tricks
The OJK’s plan to issue the above circulars has been applauded by Telisa Aulia, an economist from Universitas Indonesia. According to Mrs. Aulia, these regulatory instruments will bring about a number of changes, albeit temporary.
 
“Indeed in the short-term there will be responses to these regulations, but in the long run everything will be much more organized,” stated Mrs. Aulia.
 
However, Mrs. Aulia continued, these circulars will not prevent financial service providers from trying new tricks to exploit legal loopholes.
 
“Businesses will surely adapt to the rules by carrying out business activities that will always have moral hazards,” she concluded.
 
One Already Issued
In addition to the circular letters that are currently being drafted by the OJK, the OJK recently issued Circular Letter No. 12/SEOJK.07/2014 on the Submission of Information for the Marketing of Financial Service Products and/or Services (Circular 12).
 
Mr. Prabowo explained that Circular 12 aims to protect the public from companies offering products that are not under the OJK’s authority.
 
“Experiences from investment disputes that are allegedly illegal often involve offering investments with interest or yields beyond reasonable limits, and in fact, the company does not have a license and is not supervised by the OJK,” explained Mr. Prabowo.
 
Circular 12, Mr. Prabowo continued, sets out provisions on the use of data that is agreed to by the respective consumer, and how members of the public can consent to accepting telephone calls or emails from financial service providers for product or service offers.
 
Moreover, Circular 12 also prohibits utilizing freelance telemarketing. Offers of financial products made to the general public must include disclosure of the identity of the respective financial service provider.
 
“In this regulation, the OJK also regulates the terminology in the terms and conditions document that is usually printed in small letters with an asterisk, uses superlatives such as the strongest, securest, and other expressions,” expanded Mr. Prabowo.
 
(hot/kc)