OJK Regulation Number 1/POJK.07/2014 on Alternative Dispute Resolution Institutions in the Financial Services Sector

FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA
COPY
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 1/POJK.07/2014
CONCERNING
ALTERNATIVE DISPUTE RESOLUTION INSTITUTIONS
IN THE FINANCIAL SERVICES SECTOR
BY THE GRACE OF GOD ALMIGHTY,
THE COMMISSIONERS' COUNCIL OF THE FINANCIAL SERVICES AUTHORITY, Considering: a. that the chain of Consumer Protection covers education, information services, and Complaints up to facilitation for the resolution of Complaints; b. that in the resolution of Complaints by Financial Service Institutions, agreement between Consumers and Financial Service Institutions is often not reached;
c. that to overcome this, it is necessary to have Alternative Dispute Resolution Institutions capable of resolving Disputes quickly, cheaply, fairly, and efficiently;
d. that based on considerations as referred to in letters a, b, and c, it is necessary to establish a Financial Services Authority Regulation concerning Alternative Dispute Resolution Institutions in the Financial Services Sector; Recalling: 1. Law Number 21 of 2011 concerning the Financial Services Authority (State Gazette of the Republic of Indonesia Year 2011 Number 111, Supplement to the State Gazette of the Republic of Indonesia Number 5253);
2. Law Number 30 of 1999 concerning Arbitration and Alternative Dispute Resolution (State Gazette of the Republic of Indonesia Year 1999 Number 138, Supplement to the State Gazette of the Republic of Indonesia Number 3872);
3. Financial Services Authority Regulation Number 1/POJK.07/2013 concerning Consumer Protection in the Financial Services Sector (State Gazette Year 2013 Number 118, Supplement to the State Gazette Number 5431);
DECIDING:
To Establish: FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING ALTERNATIVE DISPUTE RESOLUTION INSTITUTIONS IN THE FINANCIAL SERVICES SECTOR.

CHAPTER I
GENERAL PROVISIONS
Article 1
In this Financial Services Authority Regulation, the following terms are defined:

1. Financial Services Authority, hereinafter abbreviated as OJK, is an independent institution free from the interference of other parties, which has the function, task, and authority for regulation, supervision, examination, and investigation as referred to in Law Number 21 of 2011 concerning the Financial Services Authority.
2. Alternative Dispute Resolution Institution is an institution that conducts dispute resolution outside of court.
3. List of Alternative Dispute Resolution Institutions is a collection of Alternative Dispute Resolution Institutions that do not contradict the principles established by OJK.
4. Financial Service Institution is an institution that carries out activities in the Banking, Capital Market, Insurance, Pension Fund, Financing Institution, and Other Financial Service Institutions sectors.
5. Banking is everything related to banks, covering institutional structure, business activities, as well as methods and processes in carrying out business activities using conventional and sharia principles as referred to in laws concerning banking and laws concerning sharia banking.
6. Capital Market is activities related to Public Offerings and trading of Securities, Public Companies related to the Securities they issue, as well as institutions and professions related to Securities as referred to in laws concerning capital markets.
7. Insurance is insurance business operating in the insurance industry sector, namely financial service businesses that gather public funds through the collection of insurance premiums to provide protection to members of the community, users of insurance services, against the occurrence of losses due to uncertain events or against life or death of a person, reinsurance business, and supporting insurance businesses that organize intermediary services, insurance loss assessment, and actuarial services, as referred to in laws concerning insurance business.
8. Pension Fund is a legal entity that manages and runs programs promising pension benefits as referred to in laws concerning pension funds.
9. Financing Institution is a business entity that carries out financing activities in the form of providing funds or capital goods as referred to in legislation concerning financing institutions.
10. Other Financial Service Institutions are pawnshops, guarantee institutions, Indonesian export financing institutions, secondary housing financing companies, and institutions that manage mandatory public funds, including organizers of social security, pension, and welfare programs, as referred to in legislation concerning pawnshops, guarantees, Indonesian export financing institutions, secondary housing financing companies, and mandatory public fund management, as well as other financial service institutions declared to be supervised by OJK based on legislation.
11. Consumer is the party or parties who place their funds and/or utilize available services at Financial Service Institutions, including customers in Banking, investors in Capital Markets, policyholders in Insurance, and participants in Pension Funds, based on legislation in the financial services sector.
12. Complaint is the submission of expressions of dissatisfaction by Consumers caused by financial losses or potential financial losses to Consumers that are suspected to occur due to errors or negligence of Financial Service Institutions in the placement of funds by Consumers at Financial Service Institutions and/or utilization of services and/or products of Financial Service Institutions.
13. Dispute is a disagreement between Consumers and Financial Service Institutions in the placement of funds by Consumers at Financial Service Institutions and/or utilization of services and/or products of Financial Service Institutions after going through the Complaint resolution process by Financial Service Institutions.

CHAPTER II
RESOLUTION OF COMPLAINTS BY FINANCIAL SERVICE INSTITUTIONS
Article 2
(1) Complaints must first be resolved by Financial Service Institutions.
(2) In the event that agreement on the resolution of Complaints as referred to in paragraph (1) is not reached, Consumers and Financial Service Institutions may conduct Dispute resolution outside of court or through the court. (3) Dispute resolution outside of court as referred to in paragraph (2) is conducted through Alternative Dispute Resolution Institutions. (4) Alternative Dispute Resolution Institutions as referred to in paragraph (3) are included in the List of Alternative Dispute Resolution Institutions established by OJK. (5) Dispute resolution through Alternative Dispute Resolution Institutions as referred to in paragraph (4) is confidential.
Article 3
(1) Financial Service Institutions are required to become members of Alternative Dispute Resolution Institutions in the financial services sector as referred to in Article 2 paragraph (4). (2) In the event that Financial Service Institutions carry out cross-sector financial services business activities, such Financial Service Institutions are only required to become members of 1 (one) Alternative Dispute Resolution Institution corresponding to their main business activity. (3) Financial Service Institutions are required to implement the decisions of Alternative Dispute Resolution Institutions.

CHAPTER III
LIST OF ALTERNATIVE DISPUTE RESOLUTION INSTITUTIONS
Article 4
Alternative Dispute Resolution Institutions included in the List of Alternative Dispute Resolution Institutions established by OJK include Alternative Dispute Resolution Institutions that:
a. have dispute resolution services at least comprising:

1. mediation;
2. adjudication; and
3. arbitration.
   b. have regulations covering:
4. dispute resolution services;
5. dispute resolution procedures;
6. dispute resolution costs;
7. dispute resolution timeframes;
8. conflict of interest and affiliation provisions for mediators, adjudicators, and arbitrators; and
9. codes of ethics for mediators, adjudicators, and arbitrators;
   c. apply principles of accessibility, independence, fairness, and efficiency and effectiveness in all their regulations;
   d. have resources to be able to carry out dispute resolution services; and e. are founded by Financial Service Institutions coordinated by associations and/or founded by institutions exercising self-regulatory organization functions.

CHAPTER IV
PRINCIPLES OF ALTERNATIVE DISPUTE RESOLUTION INSTITUTIONS First Section Accessibility Principle
Article 5
(1) Alternative Dispute Resolution Institutions have dispute resolution service schemes that are easily accessible by Consumers.
(2) Alternative Dispute Resolution Institutions develop communication strategies to increase Consumer access to Alternative Dispute Resolution Institution services and increase Consumer understanding of the dispute resolution process carried out by Alternative Dispute Resolution Institutions. (3) Alternative Dispute Resolution Institutions provide services covering the entire territory of Indonesia. Second Section Independence Principle
Article 6
(1) Alternative Dispute Resolution Institutions have supervisory organs that ensure that Alternative Dispute Resolution Institutions have met the requirements to perform their functions.
(2) Alternative Dispute Resolution Institutions are prohibited from granting veto rights to their members.
(3) Alternative Dispute Resolution Institutions consult with relevant stakeholders in drafting or changing regulations before implementing them.
(4) Alternative Dispute Resolution Institutions have adequate resources to perform their functions and are not dependent on specific Financial Service Institutions.
Third Section
Fairness Principle
Article 7
(1) Alternative Dispute Resolution Institutions have regulations in making decisions, with the following provisions:
a. mediators truly act as facilitators in bringing together the interests of the disputing parties to obtain an agreement on resolution; b. adjudicators and arbitrators are prohibited from making decisions based on information unknown to the parties; and
c. adjudicators and arbitrators are required to provide written reasons in every decision.
(2) Alternative Dispute Resolution Institutions provide written reasons for the rejection of dispute resolution requests from Consumers and/or Financial Service Institutions.
Fourth Section
Efficiency and Effectiveness Principle
Article 8
(1) Dispute resolution regulations at Alternative Dispute Resolution Institutions regulate dispute resolution timeframes.
(2) Alternative Dispute Resolution Institutions charge low costs to Consumers in dispute resolution.
(3) Alternative Dispute Resolution Institutions have dispute resolution regulations containing provisions ensuring that their members comply with and implement every decision of the Alternative Dispute Resolution Institution. (4) Alternative Dispute Resolution Institutions supervise the implementation of decisions.

CHAPTER V
REPORTING OF ALTERNATIVE DISPUTE RESOLUTION INSTITUTIONS IN THE FINANCIAL SERVICES SECTOR
Article 9
(1) Alternative Dispute Resolution Institutions included in the List of Alternative Dispute Resolution Institutions established by OJK submit periodic reports every 6 (six) months, namely in June and December, to OJK, no later than the 10th day of the following month. (2) In the event that the reporting date as referred to in paragraph (1) falls on a holiday, the report is submitted no later than the next working day. (3) Reports as referred to in paragraph (1) contain information at least:
a. number of dispute resolution requests; b. demographics of Consumers submitting dispute resolution requests;
c. number of dispute resolution requests rejected because they do not meet requirements (including reasons for rejection);
d. Disputes still in the process of resolution; e. timeframes required to resolve each Dispute; f. types of services and/or products that are the subject of Disputes; and g. number of Disputes that have been decided and results of monitoring over the implementation of said decisions.

CHAPTER VI
OTHER PROVISIONS
Article 10
(1) Alternative Dispute Resolution Institutions are formed by Financial Service Institutions coordinated by associations of each respective financial services sector.
(2) Alternative Dispute Resolution Institutions for the banking, financing, guarantee, and pawnshop sectors must be formed no later than December 31, 2015.
Article 11
(1) In the event that Alternative Dispute Resolution Institutions as referred to in Article 10 paragraph (2) have not yet been formed, Consumers may submit requests for facilitation of Dispute resolution to OJK. (2) Dispute facilitation by OJK as referred to in paragraph (1) is carried out in accordance with provisions in OJK Regulations governing Consumer Protection in the Financial Services Sector.

CHAPTER VII
SANCTIONS
Article 12
(1) Financial Service Institutions that violate provisions as referred to in this Financial Services Authority Regulation are subject to administrative sanctions including:
a. written warnings; b. fines, namely the obligation to pay a certain amount of money;
c. restriction of business activities;
d. suspension of business activities; and/or e. revocation of business licenses.
(2) Sanctions as referred to in paragraph (1) letters b, c, d, or e may be imposed with or without prior imposition of written warning sanctions as referred to in paragraph (1) letter a.
(3) Fine sanctions as referred to in paragraph (1) letter b may be imposed separately or together with the imposition of sanctions as referred to in paragraph (1) letters c, d, or e.
(4) The amount of fine sanctions as referred to in paragraph (1) letter b is determined by OJK based on provisions regarding administrative sanctions in the form of fines applicable to each financial services sector. (5) OJK may announce the imposition of administrative sanctions as referred to in paragraph (1) to the public.

CHAPTER VIII
CLOSING PROVISIONS
Article 13
This Financial Services Authority Regulation takes effect upon being promulgated.
To ensure that everyone knows about it, order the promulgation of this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia.
Signed in Jakarta
On January 16, 2014
CHAIRMAN OF THE COMMISSIONERS' COUNCIL
FINANCIAL SERVICES AUTHORITY,
Signed,
MULIAMAN D. HADAD
Promulgated in Jakarta on January 23, 2014
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA,
Signed,
AMIR SYAMSUDIN
STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2014 NUMBER 12 Copy matches the original Head of Legal Assistance Division Legal Directorate, Signed, Mufli Asmawidjaja

EXPLANATION
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 1/POJK.07/2014
CONCERNING
ALTERNATIVE DISPUTE RESOLUTION INSTITUTIONS
IN THE FINANCIAL SERVICES SECTOR
I. GENERAL
Consumer Protection in the financial services sector aims to create a reliable Consumer Protection system, enhance Consumer empowerment, and foster awareness among Financial Service Institutions so as to be able to increase public trust in the financial services sector. Consumer Protection is a series of policies and implementation of activities covering education, information services, and complaints as well as facilitation of Dispute resolution for Consumers in the financial services sector and users of financial services. The complaint resolution mechanism in the financial services sector is pursued through 2 (two) stages, namely Complaint resolution carried out by Financial Service Institutions (internal dispute resolution) and Dispute resolution through judicial bodies or bodies outside the judiciary (external dispute resolution). Complaint resolution by Financial Service Institutions is carried out based on the principle of deliberation to reach consensus. In Complaint resolution, agreement between Consumers and Financial Service Institutions is not always reached. In order to protect Consumers, there is a need for a Dispute resolution mechanism between Consumers and Financial Service Institutions external to Financial Service Institutions through judicial bodies or bodies outside the judiciary. Dispute resolution through bodies outside the judiciary can be conducted by Alternative Dispute Resolution Institutions. In line with the characteristics and developments in the financial services sector which are constantly fast, dynamic, and full of innovation, Alternative Dispute Resolution Institutions outside the judiciary require procedures that are quick, low-cost, with objective, relevant, and fair results. Dispute resolution through Alternative Dispute Resolution Institutions is confidential so that each party involved in the dispute feels more comfortable in conducting the Dispute resolution process, and does not require a long time because it is designed to avoid procedural and administrative delays. Furthermore, Dispute resolution through Alternative Dispute Resolution Institutions is conducted by people who indeed have expertise according to the type of Dispute, so as to produce objective and relevant decisions. Taking these matters into account, OJK issues regulations concerning Alternative Dispute Resolution Institutions in the financial services sector. In performing its functions, Alternative Dispute Resolution Institutions fulfill several principles, namely accessibility, independence, fairness, and efficiency and effectiveness. So that Consumers and Financial Service Institutions obtain a place for Dispute resolution that meets the aforementioned principles, OJK establishes the List of Alternative Dispute Resolution Institutions in the financial services sector. In applying the principle of accessibility, Alternative Dispute Resolution Institutions develop communication strategies. This aims to increase Consumer access to
Alternative Dispute Resolution Institution services and increase Consumer understanding of the alternative dispute resolution process. Alternative Dispute Resolution Institutions are independent in the sense that they do not depend on specific Financial Service Institutions. Mediators, adjudicators, and arbitrators of Alternative Dispute Resolution Institutions are fair in performing their duties, namely mediators truly act as facilitators to achieve settlement agreements and the obligation for adjudicators and arbitrators to provide written reasons in every decision. Fulfillment of the principles of efficiency and effectiveness is done by Alternative Dispute Resolution Institutions through determining dispute resolution timeframes, decision implementation timeframes, and imposing low costs in dispute resolution. With the availability of Dispute resolution mechanisms in the financial services sector through Alternative Dispute Resolution Institutions applying principles of accessibility, independence, fairness, and efficiency and effectiveness, the chain of Consumer Protection systems will increase Consumer trust in Financial Service Institutions and have a positive impact on the development of the financial services industry in realizing a financial system that grows sustainably and stably.
II. ARTICLE BY ARTICLE
Article 1
Clearly sufficient.
Article 2
Paragraph (1)
Clearly sufficient.
Paragraph (2)
Clearly sufficient.
Paragraph (3)
Clearly sufficient.
Paragraph (4)
Clearly sufficient.
Paragraph (5)
What is meant by dispute resolution being confidential is that it is closed and its decisions are not announced.
Article 3
Paragraph (1)
Clearly sufficient.
Paragraph (2)
Examples of Financial Service Institutions carrying out cross-sector financial services business activities are as follows:
PT Bank XYZ Tbk carries out main business activities as a general bank that has conducted a public offering, also acts as an insurance sales agent, becomes a custodian bank, and acts as a mutual fund securities sales agent, so PT XYZ Tbk carries out cross-sector financial services business activities, namely in the Banking, Insurance, and Capital Market sectors. PT XYZ Tbk is only required to become a member of 1 (one) Alternative Dispute Resolution Institution, namely the Banking sector. Paragraph (3) Decisions of Alternative Dispute Resolution Institutions are binding on Financial Service Institutions. What is meant by "decision" includes mediation settlement deeds.
Article 4
Letter a

1. What is meant by "mediation" is a method of Dispute resolution through a third party appointed by the disputing parties to help the disputing parties reach an agreement.
2. What is meant by "adjudication" is a method of Dispute resolution through a third party appointed by the disputing parties to impose a decision on Disputes arising between the said parties.
   Adjudication decisions are binding on Financial Service Institutions. If Consumers approve the adjudication decision even though Financial Service Institutions do not approve it, then Financial Service Institutions are required to implement the adjudication decision. Conversely, if Consumers do not approve the adjudication decision even though Financial Service Institutions approve it, the decision cannot be implemented.
3. What is meant by "arbitration" is a method of resolving civil Disputes outside of court based on an arbitration agreement made in writing by the disputing parties.
   Letter b
   Clearly sufficient.
   Letter c
   Clearly sufficient.
   Letter d
   What is meant by "resources" includes among others human resources (mediators, adjudicators, arbitrators, administrative managers, etc.), facilities, and infrastructure.
   Letter e
   What is meant by "institutions exercising self-regulatory organization functions" includes among others Stock Exchanges, Clearing and Guarantee Institutions, and Settlement and Custody Institutions.
   Article 5
   Paragraph (1)
   What is meant by "easily accessible" includes among others Alternative Dispute Resolution Institutions providing facilities that make it easy for Consumers to know the types of dispute resolution services available. Paragraph (2) Examples of developing communication strategies to increase Consumer understanding of the dispute resolution process include through Alternative Dispute Resolution Institution websites or brochures provided by Alternative Dispute Resolution Institutions. Paragraph (3) In providing services covering the entire territory of Indonesia, Alternative Dispute Resolution Institutions do not necessarily need to have offices in every region of Indonesia, but Alternative Dispute Resolution Institutions can provide services by utilizing information technology, including teleconference and/or video conference tools.
   Article 6
   Paragraph (1)
   What is meant by "supervisory organ" includes among others advisory boards or supervisory boards whose duty is to supervise the activities of Alternative Dispute Resolution Institutions.
   Paragraph (2)
   What is meant by "veto rights" includes among others the right to replace officials or change the regulations of Alternative Dispute Resolution Institutions.
   Paragraph (3)
   What is meant by "stakeholders" includes among others associations or Consumer associations or institutions operating in the field of Consumer Protection and associations or Financial Service Institution associations according to their respective sectors. Paragraph (4) What is meant by "resources" includes among others human resources, facilities, and infrastructure.
   Article 7
   Paragraph (1)
   Letter a
   Clearly sufficient.
   Letter b ...

Letter b
In the event that an adjudicator or arbitrator possesses information from parties outside the disputing parties, and such information is used as a basis for consideration in making a decision, the adjudicator or arbitrator must convey such information to the parties. Letter c Clearly stated. Paragraph (2) Clearly stated.
Article 8
Paragraph (1)
What is meant by "timeframe" is the timeframe for dispute resolution at the mediation, adjudication, and arbitration stages.
Paragraph (2)
Clearly stated.
Paragraph (3)
An example of provisions to ensure that members of the Alternative Dispute Resolution Institution comply with and implement every decision of the Alternative Dispute Resolution Institution is provisions regarding the implementation timeframe of such decisions. What is meant by "decision" includes the mediation agreement deed. Paragraph (4) Clearly stated.
Article 9
Paragraph (1)
Reporting as referred to in paragraph (1) is submitted to ...

to the Education and Consumer Protection Division, OJK Consumer Protection Legal Defense Directorate with the address:
Radius Prawiro Building, 2nd Floor
Bank Indonesia Office Complex
M.H. Thamrin Street Number 2
Central Jakarta 10350
Paragraph (2)
Clearly stated.
Paragraph (3)
Clearly stated.
Article 10
Paragraph (1)
An example of the formation of an Alternative Dispute Resolution Institution in the Banking sector is formed by banks coordinated by an association in the Banking sector, for example, the National Bank Association (Perbanas), the Association of State-Owned Banks (Himbara), the Indonesian Rural Bank Association (Perbarindo), the Regional Development Bank Association (Asbanda), the Indonesian Sharia Bank Association (Asbisindo), and the Indonesian Foreign Bank Association. Paragraph (2) Clearly stated.
Article 11
Paragraph (1)
Clearly stated.
Paragraph (2)
Clearly stated.
Article 12
Clearly stated.
Article 13
Clearly stated.
SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 5499 ---