SEOJK on Standard Form Contracts

To:
Directors/Management of Financial Service Business Actors, At Your Location.

COPY
CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY NUMBER 13/SEOJK.07/2014 ON STANDARD FORM CONTRACTS

In light of the enforcement of Financial Services Authority Regulation Number 1/POJK.07/2013 on Consumer Protection in the Financial Services Sector (State Gazette of the Republic of Indonesia Year 2013 Number 118, Supplement to the State Gazette of the Republic of Indonesia Number 5431), it is necessary to regulate implementation guidelines to adjust clauses in Standard Form Contracts as regulated in Article 21 and Article 22, in this Financial Services Authority Circular Letter as follows:

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

1. Standard Form Contract is a written agreement established unilaterally by Financial Service Business Actors and containing standard clauses regarding content, form, or method of creation, and used to offer products and/or services to Consumers on a mass basis.

2. Financial Service Business Actor, hereinafter abbreviated as FSBA, is a Commercial Bank, Rural Bank, Securities Company, Investment Advisor, Custodian Bank, Pension Fund, Insurance Company, Reinsurance Company, Financing Company, Pawnshop Company, and Guarantee Company, both those conducting conventional business activities and those conducting Sharia business activities.

3. Consumer is a party that places its funds and/or utilizes available services at the FSBA, including customers at Banks, investors in the Capital Market, policyholders in Insurance, and participants in Pension Funds, based on laws and regulations in the financial services sector.

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II. CLAUSES IN STANDARD FORM CONTRACTS

1. FSBAs must fulfill balance, justice, and fairness in the creation of contracts with Consumers.

2. In the event that FSBA designs, formulates, establishes, and offers Standard Form Contracts, FSBA must base this on the provisions as referred to in item 1.

3. Clauses in Standard Form Contracts that are prohibited are those containing:

a. Exoneration/Exemption clauses, namely those whose content adds rights and/or reduces obligations of the FSBA, or reduces rights and/or adds obligations of the Consumer.

b. Abuse of circumstances, namely a condition in the Standard Form Contract that has indications of abuse of circumstances. Examples of this condition include exploiting the Consumer's urgent condition due to specific circumstances or in an emergency, and the FSBA intentionally or unintentionally failing to explain the benefits, costs, and risks of the offered products and/or services.

4. Standard Form Contracts that are prohibited are contracts containing the following matters:

a. stating the transfer of responsibility or obligations of the FSBA to the Consumer;

b. stating that the FSBA has the right to refuse the return of money already paid by the Consumer for products and/or services purchased;

c. stating the granting of power of attorney from the Consumer to the FSBA, either directly or indirectly, to carry out any unilateral actions regarding goods pledged by the Consumer, except where such unilateral actions are carried out based on laws and regulations;

d. requiring the Consumer to prove the FSBA's allegations that the loss of utility of the products and/or services purchased by the Consumer is not the responsibility of the FSBA;

e. granting rights to the FSBA to reduce the utility of products and/or services or reduce the Consumer's assets that are the object of the product and service agreement;

f. stating that the Consumer is subject to new, additional, subsequent, and/or changed regulations made unilaterally by the FSBA during the period the Consumer utilizes the products and/or services purchased; and/or

g. stating that the Consumer grants power of attorney to the FSBA for the imposition of mortgage rights, pledge rights, or guarantee rights over products and/or services purchased by the Consumer on an installment basis.

III. FORMAT OF STANDARD FORM CONTRACTS

1. Standard Form Contracts containing Consumer rights and obligations and requirements that legally bind the Consumer must use letters, writing, symbols, diagrams, signs, terms, phrases that are readable, and/or sentences that are simple in the Indonesian language and easily understood by the Consumer.

2. If the Consumer finds ambiguity, the FSBA must provide explanations regarding terms, phrases, sentences, and/or symbols, diagrams, and signs that have not been understood by the Consumer, either in writing within the Standard Form Contract, or orally before the Standard Form Contract is signed.

3. In the event that the Standard Form Contract uses terms, phrases, and/or sentences from languages other than Indonesian, then the terms, phrases, and/or sentences from the other languages must be juxtaposed with the terms, phrases, and/or sentences in Indonesian.

4. Standard Form Contracts must contain the following statement:

"THIS AGREEMENT HAS BEEN ADJUSTED TO THE PROVISIONS OF LAWS AND REGULATIONS, INCLUDING PROVISIONS OF FINANCIAL SERVICES AUTHORITY REGULATIONS."

5. In addition to printed form, Standard Form Contracts may be in digital or electronic form, or referred to as e-contracts, to be offered by FSBA through electronic media.

6. In the event that the Standard Form Contract is in printed form, the following matters apply:

a. FSBA must ensure there is written Consumer approval by, among other things, affixing a signature in the Standard Form Contract or another document that is an inseparable part of the Standard Form Contract stating Consumer approval.

b. FSBA may duplicate it so that transactions can fulfill their purpose, namely being fast, effective, efficient, recurring, and providing legal certainty.

c. FSBA provides sufficient time for the Consumer to read and understand the Standard Form Contract before signing it or before the Standard Form Contract becomes effective.

d. FSBA must comply with provisions in applicable laws and regulations, including laws regulating electronic information and transactions.

IV. OTHER PROVISIONS

1. In the event that at the time this Financial Services Authority Circular Letter is enforced, FSBA is adjusting clauses in Standard Form Contracts as regulated in Article 54 of Financial Services Authority Regulation Number 1/POJK.07/2013 on Consumer Protection in the Financial Services Sector, then FSBA must notify the Consumer.

2. In the event that at the time this Financial Services Authority Circular Letter is enforced, FSBA has not yet completed the implementation of adjusting provisions in Article 54 of Financial Services Authority Regulation Number 1/POJK.07/2013 on Consumer Protection in the Financial Services Sector, then FSBA must create an action plan approved by the Supervision Division of the respective FSBA concerned.

V. CLOSING PROVISIONS

This Financial Services Authority Circular Letter takes effect on the date it is established.

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

Established in Jakarta
On the date 20 August 2014

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

Signed,
KUSUMANINGTUTI S. SOETIONO

STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 69 DATED 29 AUGUST 2014

A copy in accordance with the original
Director of Legal Affairs 1
Legal Department,

Signed,
Tini Kustini