SEOJK on Consumer Complaint Services and Resolution for Financial Business Entities

To:
Directors/Management of Financial Business Entities, both those conducting conventional business activities and those conducting Sharia business activities, At your location.

COPY
CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY NUMBER 2/SEOJK.07/2014 CONCERNING CONSUMER COMPLAINT SERVICES AND RESOLUTION FOR FINANCIAL BUSINESS ENTITIES

In connection with Financial Services Authority Regulation Number 01/POJK.07/2013 concerning Consumer Protection in the Financial Services Sector, it is necessary to regulate provisions regarding the services and resolution of Consumer complaints for Financial Business Entities with the following provisions:

I. GENERAL PROVISIONS
In this Circular Letter of the Financial Services Authority, the following terms are defined:

1. Complaint Handling is the service and resolution of complaints in the financial services sector.

2. Financial Business Entities, hereinafter abbreviated as PUJK, are Commercial Banks, Rural Banks, Securities Companies, Investment Advisors, Custodian Banks, Pension Funds, Insurance Companies, Reinsurance Companies, Financing Companies, Pawnshops, and Guarantee Companies, both those conducting business activities on a conventional basis and those on a Sharia basis.

3. Directors:
   a. for PUJK that are legal entities in the form of Limited Companies (Perseroan Terbatas) are directors as referred to in laws concerning limited companies; b. for PUJK that are legal entities in the form of Regional Enterprises (Perusahaan Daerah) are directors as referred to in laws concerning regional enterprises;
   c. for PUJK that are legal entities in the form of Cooperatives are managers as referred to in laws concerning cooperatives; and
   d. for PUJK that are legal entities in the form of Pension Funds are managers as referred to in laws concerning pension funds; e. for branches of foreign banks are the heads of the branches of foreign banks.

4. Consumer refers to parties who place their funds and/or utilize services available at Financial Institutions, including customers in Banking, investors in the Capital Market, policyholders in Insurance, and participants in Pension Funds, based on laws and regulations in the financial services sector.

II. MECHANISM FOR CONSUMER COMPLAINT SERVICES AND RESOLUTION

1. A complaint is an expression of dissatisfaction by a Consumer caused by actual and/or potential financial losses to the Consumer, alleged to be due to errors or negligence by the Financial Institution.

2. PUJK must service and resolve Consumer complaints before such complaints are submitted to other parties.

3. PUJK must immediately follow up on and resolve complaints no later than 20 (twenty) working days after the date of receipt of the complaint.

4. In certain conditions, PUJK may extend the time limit by a maximum of 20 (twenty) additional working days.

5. The specific conditions as referred to in item 4 are:
   a. the PUJK office receiving the complaint is not the same as the PUJK office where the complained issue occurred, and there are communication obstacles between the two PUJK offices; b. the financial transaction complained about by the Consumer requires special research into PUJK documents; and/or
   c. there are other matters beyond the control of PUJK, such as the involvement of third parties outside PUJK in financial transactions conducted by the Consumer.

6. The extension of the complaint resolution time limit as referred to in item 4 must be notified in writing to the Consumer submitting the complaint before the time limit as referred to in item 3 expires.

7. PUJK must have complaint service and resolution procedures that at least cover the following:
   a. the application of accessibility, independence, fairness, efficiency, and effectiveness principles; b. the implementation of receiving Consumer complaints through various means, including face-to-face, email, and letters, but excluding complaints made through media coverage;
   c. PUJK must immediately follow up on and resolve complaints no later than 20 (twenty) working days as referred to in item 3;
   d. in certain conditions, PUJK may extend the time limit by a maximum of 20 (twenty) additional working days as referred to in item 4; e. Specific conditions as referred to in letter d follow the provisions as referred to in item 5; f. Communication procedures with Consumers must at least cover:

   1. complaint service and resolution procedures in a format that is easy to understand and accessible to Consumers; and
   2. resolution offers if, based on analysis and evaluation conducted by PUJK, the complaint is caused by errors from PUJK.
      g. keeping confidential information regarding Consumers who file complaints from any party, except:
   3. to the Financial Services Authority;
   4. in the context of resolving complaints;
   5. as required by laws and regulations; and/or
   6. with the Consumer's consent.

8. PUJK must provide complaint services and resolution, with the following provisions:
   a. providing balanced and objective treatment for every complaint; b. providing adequate opportunities for Consumers to explain the substance of the complaint;
   c. providing opportunities for other interested parties to provide explanations in the resolution of complaints (if any).

9. PUJK is prohibited from charging fees for complaint services and resolution.

10. PUJK must administer complaint services and resolution. Administration must contain at least the following information:
    a. Consumer identity; b. substance of the complaint; and
    c. actions taken to resolve the complaint.

11. PUJK provides information regarding the status of Consumer complaints through various communication channels provided by PUJK, including via website, letters, email, or telephone.

12. PUJK and Consumers can monitor the development status of Complaint Handling submitted by Consumers to the Financial Services Authority through the Integrated Consumer Service System for the Financial Services Sector.

13. The Financial Services Authority may request or access the development status of Complaint Handling submitted by Consumers to PUJK.

III. RESOLUTION OF COMPLAINTS IN THE FORM OF APOLOGY OR OFFERING COMPENSATION (REDRESS/REMEDY)

PUJK may resolve complaints by offering an apology or compensation (redress/remedy) to Consumers with the following provisions:

1. Considering that an "apology" is a bilateral act between PUJK and the Consumer, the procedure for providing an "apology" is made based on agreement. In the absence of an agreement between PUJK and the Consumer, the "apology" is conducted in writing.

2. Compensation may be given for losses occurring due to financial aspects. The compensation as referred to must meet the following requirements:
   a. there is a complaint containing a claim for compensation related to financial aspects; b. the Consumer's complaint submitted is true, after PUJK has conducted research;
   c. there is a discrepancy between the product and/or service agreement and the product and/or service received;
   d. there is material loss; e. the Consumer has fulfilled their obligations.

3. The mechanism for claiming compensation must meet the following:
   a. submitting a claim for compensation accompanied by a chronology of events regarding the explanation of products and/or utilization of services that do not match, accompanied by evidence; b. the claim is submitted no later than 30 (thirty) days from the date of discovering that the product and/or service does not match the agreement;
   c. the claim is submitted via a claim letter and may be represented by attaching a power of attorney;
   d. compensation is only for impacts directly affecting the Consumer and is at most equal to the value of the loss experienced by the Consumer.

IV. RESOLUTION OF COMPLAINTS THROUGH ALTERNATIVE DISPUTE RESOLUTION INSTITUTIONS

1. Consumer complaints must first be resolved by PUJK.

2. In the event that an agreement on complaint resolution as referred to in item 1 is not reached, Consumers and PUJK may resolve Disputes outside of court or through the courts.

3. Dispute resolution outside of court as referred to in item 2 is conducted through Alternative Dispute Resolution Institutions listed in the List of Alternative Dispute Resolution Institutions established by the Financial Services Authority.

4. PUJK must implement the decisions of Alternative Dispute Resolution Institutions.

5. Regulations regarding Alternative Dispute Resolution Institutions in the Financial Services Sector will be further regulated by Financial Services Authority Regulations.

V. FORMATION OF WORK UNITS OR APPOINTMENT OF OFFICERS PERFORMING CONSUMER COMPLAINT SERVICES AND RESOLUTION FUNCTIONS

1. The Directors decide on the implementation of complaint service and resolution functions through the formation of work units or by appointing members of the Directors, or officers at a level below the Directors, who perform these functions.

2. The determination of the formation of work units or officers as referred to in item 1 is conducted with considerations including:
   a. the type of products and/or services offered; b. the type, number, and distribution of Consumers, both retail and corporate Consumers;
   c. the value of transactions conducted; and
   d. the organizational structure and distribution of operational activities, including geographical distribution.

3. The work units or appointed officers performing consumer complaint services and resolution functions are responsible to the Directors.

4. The work units or appointed officers performing consumer complaint services and resolution functions must be independent and have access to other functions related to their duties to service and resolve complaints.

5. Employees in the work units, or appointed officers performing complaint services and resolution, must have at least:
   a. knowledge regarding the types of products and/or services provided or issued by PUJK; b. experience in Consumer services;
   c. authority to make decisions regarding complaint services and resolution.

6. In the event that a Consumer complaint involves employees in the work units, members of the Directors, or officers at a level below the Directors performing complaint service and resolution functions, PUJK must appoint other employees in the work units performing complaint services and resolution, members of the Directors, or officers at a level below the Directors to service and resolve the respective complaints.

VI. HUMAN RESOURCES AND TRAINING

1. In implementing consumer complaint services and resolution functions and considering risk management aspects, PUJK must conduct training. In determining training participants, PUJK prioritizes employees whose daily tasks meet the following criteria:
   a. interacting directly with Consumers (front liners); b. supervising the implementation of consumer complaint services and resolution; or
   c. related to reporting to the Financial Services Authority.

2. Employees meeting the criteria as referred to in item 1 must receive training periodically, while other employees must receive training at least 1 (one) time during their employment period. Specifically, employees who interact directly with Consumers (front liners) must receive training before placement.

3. To determine employee understanding levels and training material relevance, PUJK must evaluate each training session conducted. PUJK follows up on training evaluation results by refining training materials and methods.

VII. INTERNAL CONTROLS

1. To minimize potential risks faced by PUJK, internal control systems must be able to timely detect weaknesses and deviations occurring in consumer complaint services and resolution.

2. Internal controls regarding the implementation of consumer complaint services and resolution are carried out by work units performing internal audit functions with authority at least covering:
   a. conducting compliance tests against policies and procedures through sample testing from various services, products, and Consumers using a risk-based approach to obtain an overview of the effectiveness of consumer protection policy and procedure implementation; b. formulating risk-based audit programs with audit priorities on work units or branches classified as having high business complexity;
   c. assessing the adequacy of processes in PUJK regarding consumer complaint services and resolution; and
   d. analyzing and evaluating complaints to reduce the causes of complaints.

VIII. REPORTING ON COMPLAINT SERVICES AND RESOLUTION

1. Complaints reported to the Financial Services Authority are Consumer dissatisfaction containing financial losses and disputes between PUJK and Consumers.

2. Consumers may submit complaints to the Financial Services Authority either physically through provided media or electronically via the Integrated Consumer Service System for the Financial Services Sector.

3. PUJK must periodically report complaints and follow-up actions regarding complaint services and resolution to the Financial Services Authority, specifically the Executive Head who oversees PUJK activities, with copies to Members of the Board of Commissioners in the Education and Consumer Protection Field.

4. PUJK reports to the Financial Services Authority are conducted manually, i.e., through physical submission of reports and electronically via the Integrated Consumer Service System for the Financial Services Sector.

5. Reports are submitted periodically every 3 (three) months (March, June, September, and December) and submitted no later than the 10th (tenth) of the following month. If the 10th (tenth) falls on a holiday, the submission of the report is conducted on the first working day after the holiday.

6. PUJK is deemed not to have submitted reports if the submission of complaint reports, handling, and resolution exceeds a period of 3 (three) consecutive months from the end of the report submission deadline.

7. The imposition of sanctions for late and/or non-submission of complaint, handling, and resolution reports does not eliminate the obligation of PUJK to submit such reports.

8. Reports as referred to in item 3 are as attached, which form an integral part of this Circular Letter.

IX. CLOSING PROVISIONS

Provisions in this Circular Letter of the Financial Services Authority take effect on August 6, 2014.

To ensure everyone knows, the publication of this Circular Letter of the Financial Services Authority is ordered by placing it in the State Gazette of the Republic of Indonesia.

Established in Jakarta
On February 14, 2014

MEMBER OF THE BOARD OF COMMISSIONERS
IN THE FIELD OF EDUCATION AND CONSUMER PROTECTION,

Signed,

Copy matches the original
KUSUMANINGTUTI S. SOETIONO
Head of Legal Assistance Division
Legal Directorate,

Signed,
Mufli Asmawidjaja

APPENDIX
CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY NUMBER 2/SEOJK.07/2014 CONCERNING CONSUMER COMPLAINT SERVICES AND RESOLUTION FOR FINANCIAL BUSINESS ENTITIES

INSTRUCTIONS FOR FILLING OUT THE REPORT
ON CONSUMER COMPLAINT SERVICES AND RESOLUTION
FOR FINANCIAL BUSINESS ENTITIES

General
The Consumer Complaint Services and Resolution Report, Parts I to III, are filled with the quantity of Complaints, i.e., the frequency of Complaints received, handled, and resolved during the reporting period. Subsequently, Part IV is filled with the quantity of negative publicity monitored by the Financial Business Entity.

Example:
In Banking, if during the reporting period July to September 2014 there were 40 complaints regarding savings balances with a complaint value of Rp 300 million, the number entered into the report is 40.

Part I: Types of Products and/or Services and Complained Issues
Types of Products and/or Services
Products and/or services of Financial Business Entities are those found in each type of product and/or service for Financial Business Entities that are general.
For example, products and/or services in the Capital Market are as regulated in the Accounting Guidelines for Securities Companies (PAPE) year 2009.

Problem Categories
Financial Business Entities fill the Problem Category column with the quantity of Complaints received during the reporting period.
The Problem Category column is filled with issues arising, for example, problem categories arising in Banking regarding Administrative/Provision/Transaction Fees, fines/penalties, Interest/Profit Sharing/Margin. Problem categories arising in Pension Funds, regarding the Amount of Pension Benefits Received, Failure/Delay in Providing Pension Benefits, Delay in Premium Payments. Problem categories arising in Financing Institutions, regarding Failure/Delay in Transactions, Amount of Bills/Balances. Problem categories arising in the Capital Market, regarding Default/Failure to Deliver, Interest/Profit Sharing/Margin Profits. Problem categories arising in Other Financial Services Institutions, for example, Amount of Bills/Balances, Administrative/Provision/Transaction Fees. Problem categories arising in Insurance Companies, regarding Rejection/Delay in Claim Disbursement, Amount of Claims/Insurance Coverage.

In column (b), Financial Business Entities fill the total quantity of Complaints, which is the sum of the quantities of Complaints found in column (a).
Financial Business Entities filling columns (c) through (e) describe the Resolution Status from column (b). If the PUJK and Consumer Complaint Resolution Status states "Resolved," fill column (c). If the PUJK Complaint Resolution Status states resolved but the Consumer states they do not accept the resolution result, fill the "Not Resolved" column (d). If the Complaint Resolution Status is not yet complete, fill the "In Process" column (e).

The filling of complaint quantities in column (a) is based on the core issue of the complaint submitted by the Consumer, so if a Consumer complaint involves multiple related issues, the Financial Business Entity only needs to fill the quantity of the main complaint issue.

Part II: Complaints Resolved During the Reporting Period
Technically, filling out this part is done by summing the types of products and/or services found in Part I and entering the total in column (a), column (b), or column (c) according to the resolution process time frame.

Complaints Received in Previous Reporting Periods Quantity of Complaints is filled with the quantity of Complaints received in the previous reporting period that could only be resolved in the current reporting period.

Example:
If during the September 2014 reporting period there were 25 Complaints that could not be resolved by the Financial Business Entity and could only be resolved in:

• October 2014, 15 Complaints (resolved in less than 20 days);
• October 2014, 5 Complaints (resolved in more than 20 days but less than 40 days); and
• November 2014, 5 Complaints (resolved in more than 40 days),
  then in the December 2014 reporting period, the Financial Business Entity fills this subsection with:
• 15 Complaints in column (a);
• 5 Complaints in column (b); and
• 5 Complaints in column (c);

Complaints Received in the Current Reporting Period Quantity of Complaints is filled with the quantity of Complaints received in the current reporting period, divided into the number of Complaints that have been resolved and Complaints that are currently being resolved. The quantity of Complaints currently being resolved is filled with the quantity of Complaints currently being handled, resolved within 20 working days, resolved in more than 20 days but less than 40 days, or not yet resolved until the end of the reporting period.

Part III: Causes of Complaints
Causes of Complaints are filled with the results of the Financial Business Entity's analysis regarding the causes of complaints submitted by Consumers, whether originating from weaknesses in the Financial Business Entity, Consumer caution factors, or other factors outside the control of the Financial Business Entity and Consumer, such as communication failures causing transaction failures. The total number of complaints in this part must equal the total quantity of Complaints by product type in Part I. If the cause of a complaint cannot be categorized into any of the existing criteria, the Financial Business Entity classifies the cause of the complaint under the "others" criterion and states the type of cause of the complaint.

Part IV: Negative Publicity
Negative publicity is filled with the results of the Financial Business Entity's monitoring of negative publicity in various media related to the operational activities of the Financial Business Entity, including Consumer complaints in letters to the editor, magazine articles, television coverage, or other forms of negative publicity.

The quantity of negative publicity is filled with the quantity of negative publicity related to product types in Part I and negative publicity regarding the general operations of the Financial Business Entity.

CONSUMER COMPLAINT SERVICES AND RESOLUTION REPORT
PERIOD: .................... to ........................ Year .................
NAME OF FINANCIAL BUSINESS ENTITY: ...........................................

PART I: TYPES OF PRODUCTS AND/OR SERVICES AND COMPLAINED ISSUES
No.
Types of Products and/or Services
Problem Categories
Quantity
Resolution Status
Resolved
Not Resolved
In Process
(a) (b) (c) (d) (e)
1.
2.
3.
TOTAL

PART II: COMPLAINTS RESOLVED DURING THE REPORTING PERIOD
No. DESCRIPTION QUANTITY

1. Complaints Received in Previous Reporting Period ≤ 20 Days
   (a)
   20 Days < X ≤ 40 Days
   (b)

40 Days
(c)

1. Has been resolved
2. Currently being resolved
   SUB TOTAL
3. Complaints Received in Current Reporting Period
4. Has been resolved
5. Currently being resolved
   SUB TOTAL
   TOTAL

PART III: CAUSES OF COMPLAINTS
NO. DESCRIPTION QUANTITY

1. Consumer's understanding of product characteristics
2. Inadequate product information
3. Equipment and information technology system failures/damage
4. Change/termination of agreements/contracts
5. Consumer negligence
6. Financial Business Entity negligence
7. Criminal acts by Financial Business Entity
8. Others (state)
   ..................................................
   TOTAL

PART IV: NEGATIVE PUBLICATION

Established in Jakarta
On the date of 14 February 2014

MEMBER OF THE BOARD OF COMMISSIONERS
FOR EDUCATION AND CONSUMER PROTECTION,

Signed,
KUSUMANINGTUTI S. SOETIONO

NO. DESCRIPTION QUANTITY

1. Consumer Complaints in Print/Electronic Mass Media
2. Print/Electronic Media Articles
3. Print/Electronic Media Coverage
4. Publications/Writings in Public Places
5. Social Media, Electronic Mail

Others (Specify)
................................................
TOTAL

Copy matches the original
Head of Legal Assistance Division
Legal Directorate,

Signed,
Mufli Asmawidjaja