SEOJK Regarding Guidelines for the Assessment of Alternative Dispute Resolution Institutions in the Financial Services Sector

To:
Directors or Management of Financial Service Institutions; At your location.

COPY
CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY NUMBER 7 /SEOJK.07/2015 REGARDING GUIDELINES FOR THE ASSESSMENT OF ALTERNATIVE DISPUTE RESOLUTION INSTITUTIONS IN THE FINANCIAL SERVICES SECTOR

In connection with Financial Services Authority Regulation Number 1/POJK.07/2014 concerning Alternative Dispute Resolution Institutions in the Financial Services Sector, it is necessary to regulate provisions regarding the assessment guidelines for Alternative Dispute Resolution Institutions, which may be included in the List of Alternative Dispute Resolution Institutions in the Financial Services Sector, as contained in this Circular Letter of the Financial Services Authority as follows:

I. GENERAL PROVISIONS
In this Circular Letter of the Financial Services Authority, 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 functions, duties, and authorities for regulation, supervision, examination, and investigation as referred to in Law Number 21 of 2011 concerning the Financial Services Authority.

2. Board of Commissioners is the highest leadership of OJK which is collective and collegial.

3. Member of the Board of Commissioners for Education and Consumer Protection is a member of the Board of Commissioners who handles education and consumer protection.

4. Deputy Commissioner for Education and Consumer Protection is a working unit that executes education and consumer protection functions.

5. Alternative Dispute Resolution Institution is an institution that conducts dispute resolution outside of court.

6. Alternative Dispute Resolution Institution Testing Team, hereinafter referred to as the Testing Team, is a team that conducts testing regarding the fulfillment of requirements for Alternative Dispute Resolution Institutions.

7. List of Alternative Dispute Resolution Institutions is a collection of Alternative Dispute Resolution Institutions that do not contradict the principles established by OJK.

8. Assessment of Alternative Dispute Resolution Institutions is an activity conducted by OJK to ensure that Alternative Dispute Resolution Institutions have met the requirements as referred to in Financial Services Authority Regulation Number 1/POJK.07/2014 concerning Alternative Dispute Resolution Institutions in the Financial Services Sector before they can be included in the List of Alternative Dispute Resolution Institutions in the Financial Services Sector.

II. AUTHORITY FOR ASSESSMENT OF ALTERNATIVE DISPUTE RESOLUTION INSTITUTIONS

1. The List of Alternative Dispute Resolution Institutions is established by OJK.

2. The establishment of the List of Alternative Dispute Resolution Institutions is conducted through the Assessment of Alternative Dispute Resolution Institutions.

3. The Assessment of Alternative Dispute Resolution Institutions is conducted at the initiative of OJK, not at the request of the Alternative Dispute Resolution Institution.

III. SCOPE OF ASSESSMENT OF ALTERNATIVE DISPUTE RESOLUTION INSTITUTIONS

The scope of the Assessment of Alternative Dispute Resolution Institutions includes:

1. resources of the Alternative Dispute Resolution Institution;
2. types of dispute resolution services of the Alternative Dispute Resolution Institution; and
3. regulations of the Alternative Dispute Resolution Institution.

IV. STAGES OF ASSESSMENT OF ALTERNATIVE DISPUTE RESOLUTION INSTITUTIONS

1. The Assessment of Alternative Dispute Resolution Institutions is conducted through the following stages:
   a. preliminary analysis; b. testing of the fulfillment of requirements of the Alternative Dispute Resolution Institution; and
   c. determination of the assessment results.

2. Preliminary analysis as referred to in paragraph 1 letter a is conducted with the following provisions:
   a. The preliminary analysis stage includes:

1. request for documents and/or information from the Alternative Dispute Resolution Institution;
2. verification to the Alternative Dispute Resolution Institution (if necessary);
3. processing of documents and/or information of the Alternative Dispute Resolution Institution; and
4. formulation of analysis results regarding documents and/or information of the Alternative Dispute Resolution Institution.
   b. Verification as referred to in letter a item 2) can be conducted by submitting questionnaires, visits (onsite visit), and/or interviews with the management of the Alternative Dispute Resolution Institution and/or other related parties.
   c. In the event that verification is conducted through visits (on-site visit) and/or interviews as referred to in letter b, then the verification results are recorded in the verification result minutes signed by the official appointed as the coordinator of the verification activity and 1 (one) member of the management or a party representing the management of the Alternative Dispute Resolution Institution and/or other related parties.

3. Testing of the fulfillment of requirements of the Alternative Dispute Resolution Institution as referred to in paragraph 1 letter b is conducted with the following provisions:
   a. In conducting testing of the fulfillment of requirements of the Alternative Dispute Resolution Institution, OJK forms a Testing Team considering factors of competence, integrity, and independence. b. The Testing Team as referred to in letter a is derived from internal and external OJK.
   c. A Testing Team derived from internal OJK must meet the following criteria:

1. have experience or knowledge regarding the supervision of financial service institutions, dispute resolution, and/or risk management; and
2. hold a position at least as a director or equivalent to a director.
   d. A Testing Team derived from external OJK must meet the following criteria:
3. have experience or knowledge in the field of dispute resolution in the financial services sector;
4. are not currently serving as management of an Alternative Dispute Resolution Institution; and
5. have never been sentenced to imprisonment for 2 (two) years or more, or as a suspect or defendant in an economic criminal case.
   e. The Testing Team conducts testing of the fulfillment of requirements of the Alternative Dispute Resolution Institution based on the results of preliminary analysis. f. The Testing Team formulates the results of testing the fulfillment of requirements of the Alternative Dispute Resolution Institution based on the weighting and assessment scale of the requirement components of the Alternative Dispute Resolution Institution as contained in the Appendix which is an integral part of this Circular Letter of the Financial Services Authority.

4. The final value of the fulfillment of requirements of the Alternative Dispute Resolution Institution is the sum of the results of multiplying the value and weight of each sub-requirement.

V. DETERMINATION OF ASSESSMENT RESULTS

1. The Assessment Results of Alternative Dispute Resolution Institutions are classified into 2 (two), namely:
   a. meet the requirements; or b. do not meet the requirements.

2. An Alternative Dispute Resolution Institution is declared to meet the requirements if it obtains a value of at least 75 (seventy-five) and there are no zero (0) values in the requirement components of the Alternative Dispute Resolution Institution.

3. An Alternative Dispute Resolution Institution is declared not to meet the requirements if it obtains a value of less than 75 (seventy-five) or there is a zero (0) value in the requirement components of the Alternative Dispute Resolution Institution.

4. In the event that the Assessment Results of Alternative Dispute Resolution Institutions state that the Alternative Dispute Resolution Institution does not meet the requirements, OJK communicates the Assessment Results of the Alternative Dispute Resolution Institution to the said Alternative Dispute Resolution Institution in writing, stating the requirements that have not been met.

5. OJK may conduct a reassessment of the Alternative Dispute Resolution Institution that does not meet the requirements as referred to in paragraph 4 after obtaining information regarding the fulfillment of requirements by the said Alternative Dispute Resolution Institution.

6. Information as referred to in paragraph 5 can be obtained through notification from the Alternative Dispute Resolution Institution and/or information requests by OJK.

7. In the event that the Assessment Results of Alternative Dispute Resolution Institutions state that the Alternative Dispute Resolution Institution meets the requirements, OJK communicates the Assessment Results of the Alternative Dispute Resolution Institution to the said Alternative Dispute Resolution Institution in writing.

8. Alternative Dispute Resolution Institutions that have met the requirements as referred to in paragraph 7 are included in the List of Alternative Dispute Resolution Institutions in the Financial Services Sector established by the Member of the Board of Commissioners for Education and Consumer Protection.

9. OJK announces the List of Alternative Dispute Resolution Institutions in the Financial Services Sector on the OJK website and national circulation newspapers.

VI. CLOSING

This Circular Letter of the Financial Services Authority takes effect on the date of establishment.

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

Established in Jakarta on 27 February 2015
MEMBER OF THE BOARD OF COMMISSIONERS
FOR EDUCATION AND
CONSUMER PROTECTION

Signed,
KUSUMANINGTUTI S. SOETIONO

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2015 NUMBER 22 17 MARCH 2015

Copy in accordance with the original
Director of Law I
Legal Department,

Signed,
Sudarmaji

APPENDIX
CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY NUMBER 7/SEOJK.07/2015 REGARDING GUIDELINES FOR THE ASSESSMENT OF ALTERNATIVE DISPUTE RESOLUTION INSTITUTIONS IN THE FINANCIAL SERVICES SECTOR

WEIGHTING AND ASSESSMENT SCALE OF ALTERNATIVE DISPUTE RESOLUTION INSTITUTIONS

No. Requirement Weight (%) Assessment Scale (0-100)

1 Resources of the Alternative Dispute Resolution Institution 30 a) Human resources. 10

1. Mediators, adjudicators, and arbitrators;
   Highest value 60, measured by the availability of mediators, adjudicators, and arbitrators compared to the workload or estimated workload of the Alternative Dispute Resolution Institution;
2. Management and supervisors; and
   Highest value 35, measured by the availability of management and supervisors of the Alternative Dispute Resolution Institution compared to the workload or estimated workload of the Alternative Dispute Resolution Institution;
3. Administrative staff.
   Highest value 5, measured by the availability of administrative staff compared to the workload or estimated workload of the Alternative Dispute Resolution Institution; b) Infrastructure. 4
4. Office;
   Highest value 40, if the Alternative Dispute Resolution Institution has a permanent office;
5. Administrative room;
   Highest value 20, measured by the availability of administrative rooms (quantity and comfort) compared to the workload or estimated workload of the Alternative Dispute Resolution Institution;
6. Dispute resolution room; and
   Highest value 20, measured by the availability of dispute resolution rooms (quantity and comfort) compared to the workload or estimated workload of the Alternative Dispute Resolution Institution;
7. Waiting room.
   Highest value 20, measured by the availability of waiting rooms (quantity and comfort) compared to the workload or estimated workload of the Alternative Dispute Resolution Institution; c) Facilities. 2 Highest value 100, measured by the completeness of facilities, including computers, telephones, teleconferencing, and software; d) Administrative system. 8
8. Planning system;
   Highest value 20, measured by the completeness of the planning system, including activity planning, budget, and human resources;
9. Documentation system;
   Highest value 20, measured by the completeness of the documentation/archiving system;
10. Supervision system;
    Highest value 20, measured by the completeness of the supervision system, including activity checklists, meetings, and activity assessments;
11. Reporting system; and
    Highest value 20, measured by the completeness of the reporting system, including financial reporting, activity reporting, and meeting minutes;
12. Communication system.
    Highest value 20, measured by the completeness of communication media, including websites, networks, and brochures; e) Resource assistance. 6 Highest value 100, measured by the extent of assistance received from specific Financial Service Institutions;

2 Types of Services of the Alternative Dispute Resolution Institution 20 a) Mediation; 10 Value 100, if the Alternative Dispute Resolution Institution has mediation services; b) Adjudication; and 6 Value 100, if the Alternative Dispute Resolution Institution has adjudication services; c) Arbitration. 4 Value 100, if the Alternative Dispute Resolution Institution has arbitration services;

3 Regulations of the Alternative Dispute Resolution Institution 50 a) Regulations regarding dispute resolution procedures; 15 Highest value 100, measured by the completeness of regulations regarding dispute resolution procedures, including mediation, adjudication, and arbitration procedural laws; b) Regulations regarding dispute resolution costs; 10 Highest value 100, if the Alternative Dispute Resolution Institution has regulations regarding dispute resolution costs and low cost levels, with assessment details:

• Value 50, if it has regulations regarding dispute resolution costs;
• Value 50, if dispute resolution costs are cheaper than others;
• Value 25, if dispute resolution costs are the same as others;
• Value 10, if dispute resolution costs are more expensive than others;
  c) Regulations regarding dispute resolution timeframes; and 5 Highest value 100, if the Alternative Dispute Resolution Institution has regulations regarding dispute resolution timeframes and fast resolution levels, with assessment details:
• Value 50, if it has regulations regarding dispute resolution timeframes;
• Value 50, if dispute resolution timeframes are faster than others;
• Value 25, if dispute resolution timeframes are the same as others;
• Value 10, if dispute resolution timeframes are slower than others;
  d) Regulations regarding conflicts of interest and affiliation for mediators, adjudicators, and arbitrators. 20 Highest value 100, measured by the completeness of regulations regarding conflicts of interest and affiliation for mediators, adjudicators, and arbitrators, including:
• Prohibition of veto rights;
• Impartial decision-making;
• Consultation with stakeholders; and
• Providing written reasons in every decision.

Established in Jakarta on 27 February 2015
MEMBER OF THE BOARD OF COMMISSIONERS
FOR EDUCATION AND
CONSUMER PROTECTION

Signed,
KUSUMANINGTUTI S. SOETIONO

Copy in accordance with the original
Director of Law I
Legal Department,

Signed,
Sudarmaji