Financial Services Authority Regulation Number 6/POJK.07/2022 concerning Consumer and Community Protection in the Financial Services Sector: A REFINED REGULATORY APPROACH TO CONSUMER PROTECTION AND ITS IMPACT ON THE FINANCIAL SERVICES SECTOR

1. Background

On 18 April 2022, the Financial Services Authority (“Otoritas Jasa Keuangan/OJK“) has issued Financial Services Authority Regulation number 6/POJK.07/2022 concerning Consumer and Community Protection in the Financial Services Sector (“POJK 6/2022“). This regulation is aimed at strengthening protection of customers of financial services, such as banks, insurance companies, pension funds, and peer-to-peer lending.

The issuance of POJK 6/2022 revoked Financial Services Authority Regulation Number 1/POJK.07/2013 on Consumer Protection in the Financial Services Sector (“POJK 1/2013”), which was viewed as failing to accommodate rapid and dynamic development of innovation and technology in financial services. Furthermore, POJK 1/2013 did not address several issues such as financial product planning and testing, consumer complaint facility and consumer protection self-assessment by the financial service actor. Financial service development has been marked by the emergence of new business actors, online marketing and utilization of online products and services, as well as electronic agreements.

POJK 6/2022 introduces some improvement of consumer protection principles in financial services by way of adequate education, information disclosure and transparency, fair treatment and responsible business behaviour, protection of assets, privacy, consumer data, as well as effective and efficient complaint handling and dispute resolution.

2. New Measures Adopt

Consisting of 10 chapters, POJK 6/2022 sets out several new consumer protection measures through financial product planning and testing, consumer complaint facility, consumer protection self-assessment by the financial service actor, amended several provisions on establishing product and/or service information summary and agreement that put forward consumers’ interest. Key changes include:

i.     Product Planning and Testing

This Regulation requires financial design products and/or services that are in accordance with the needs, capabilities, suitability of features, risks, and costs with the target consumers. The designed product must be tested further to assess risks that may potentially harm consumers. This requirement indicates that OJK adopts a regulatory approach to product life cycle by optimizing consumer protection, even from the product planning stage.

ii.    Marketing Methods

In line with Article 25 (5) (7) and (8), before contacting or offering products and/or services to potential customers through personal communication means, financial services actors must obtain the potential consumers’ consent. In that case, they must record voices and/or video as well as documenting the recordings. The customers shall be given access to the voices/video recordings of such consumer.

iii.   Product Information Summary

Similar like POJK 1/2013, Article 19 of POJK 6/2022 further requires financial services actors to provide summary on product and/or service to potential consumers before consumers decide to use the product and/or services, as well as signing the agreement to use such product and/or service. The information summary can be provided in person and/or through printed media, electronic media, and/or personal communication methods.

iv.   Agreement with Consumers

POJK 6/2022 requires financial services actors to provide sufficient time for consumers to understand the agreement before signing, or at least 2 working day-interval period after signing the agreement for products and / services that have a long and / or complex nature. POJK 6/2022 provides administrative sanctions to the financial services actors if they failed to comply with this provision.

v.    Certain Prohibited Actions for Financial Services Actors

Financial services actors are prohibited (through their Board of Directors, Board of Commissioners, Employees, and/or third parties working for or representing their interests) from enriching themselves or others, and/or abusing authority, opportunity, or facilities available to them as a result of their position that result in harm to consumers. If errors, omissions, and/or actions that violate laws and regulations occur, financial services actors will be liable for any loss suffered by consumers, except in cases where consumers’ own involvement can be proven.

vi.   Stringent Approach to Consumers’ Data Protection

The previous regulation, POJK 1/2013, only prohibits financial services actors from disclosing data and/or information about their consumers to third parties in any way, unless upon consumers’ prior written consent or as required by law. The requirement with respect to treating consumers’ data and/or information under POJK 1/2013 is less clear. Therefore, POJK 6/2022 offers clearer standards in treating consumers’ data and types of individual/corporate data, such as:

a. Requirements with respect to disclosure of consumers’ personal data and/or information to other parties;
b. Obligation to obtain prior approval from consumers for disclosing the latter’s personal data and/or information as a condition of using the products and/or services;
c. Requirements with respect to the use of personal data and/or information of consumers who have terminated the product and/or service agreement;
d. Requirements with respect to the use of data and/or personal information of prospective consumers whose applications for the use of products and/or services are rejected; and/or
e. Requirements with respect to the use data and/or personal information of prospective consumers who have withdrawn applications for the use of products and/or services.

However, similar with POJK 1/2013, the above requirements can be waived insofar as the consumers provide written approval and/or it is required by law. One notable obligation is that financial services actors must inform in writing and/or verbally the purpose and consequence of consumers’ approval with respect to consumers’ personal data and/or information, including the withdrawal procedure for approval and/or partial amendment thereof. Consumers must give their approval thereof in writing or electronically.

vii.  Consumer Protection Facilitation

With the establishment of Alternative Dispute Resolution Agency (“LAPS”) as mandated by Financial Services Authority Regulation Number 61/POJK.07/2020 on Financial Services Sector Alternative Dispute Resolution Agency, pursuant to Article 42 of POJK 6/2022, consumers may opt to settle any unresolved complaint and/or dispute out of court through LAPS. Furthermore, POJK 6/2022 has established new requirement for financial services actors to have a Consumer Protection function or unit with the following tasks:

a. Promoting principles of consumer and community protection to all employees.
b. Coordinating the planning and implementation of compliance with consumers and community protection provisions.
c. Coordinating with related units for monitoring and evaluation of compliance with the consumer and community protection provisions.
d. Reporting to the Board of Directors and providing recommendations for improvement and development of the implementation of consumer and community protection; and
e. Coordinating the preparation and submission of reports related to consumer and community protection.

viii. Self-Assessment and Reporting Obligations

To ensure the implementation of consumer protection provisions, financial services actors must conduct self-assessment and submit reports to OJK annually, no later than 30 September of the current year, through the electronic system maintained by OJK. However, POJK 6/202 has not yet provided a clear guidance on conducting self-assessment.

3. Impact on the Industry

As mentioned, POJK 6/2022 has clarified the principles and obligations in implementing consumer protection in financial services sector, which may impact the procedures applied in the business. We note that while POJK 6/2022 provides a more extensive regulatory framework for consumer protection, there are still some aspects that remain unregulated under POJK 6/2022.

In the near future, we expect OJK to issue more guidelines and circulars to supplement the effective implementation of POJK 6/2022. Moreover, one must also take into account consumer protection policies that apply specifically to each financial sector as regulated for each financial sector, such as banking, capital market, insurance, pension funds, financing and other financial sector.

For further information, please contact Ms. Sylvia Mauren at:
Marieta Mauren
Menara Global – 7th Floor
Jln. Gatot Subroto Kav. 27 Jakarta Selatan 12950, Indonesia
Phone: +62 21 5292 0918 / 0919
E-mail: mauren@marietamauren.id, info@marietamauren.id
Website: http://marietamauren.id

Disclaimer:
This article is intended for general information only. It is not intended to be, nor should it be construed as, legal advice applicable to your particular situation. You should seek the advice of legal counsel of your choice before acting upon any of the information in this article.