11 Aug 2014
OJK REGULATION ON ALTERNATIVE DISPUTE RESOLUTION IN THE FINANCIAL SECTOR
The Financial Services Authority (Otoritas Jasa Keuangan or “OJK”) issued on 16 January 2014, its Regulation No. 1/POJK/2014 regarding Alternative Dispute Resolution Institutions (“Lembaga Alternatif Penyelesaian Sengketa or “LAPS”) in the Financial Sector (“Regulation 1/2014").
The following are the provisions of note:
Establishment of the LAPS
- The LAPS is established by the respective financial services institution by coordinating with the relevant association in the respective financial services sector. Included in the financial institution category are banking, capital market, insurance, pension fund and financing institutions as well as other financial institutions such pawnshops, guarantee institutions, the Indonesian export financing institution, and institutions which perform mandatory public fund management such as providers of social security programs.
- Financial service institutions are obliged to be a member of the LAPS in the financial sector where they conduct their activities. A financial service institution which conducts activities in more than one financial sector is only be obliged to be a member of one LAPS which is relevant to its main business activities.
- The LAPS in the banking, financing, pawnshop and guarantee sector must be established by 31 December 2015. If after the lapse of such period the LAPS is not established consumers may request OJK to facilitate their dispute resolution.
Dispute settlement by the LAPS
- All customer complaints must first be handled by the respective financial service institution for their resolution, failing which the parties may seek an out of court or in court resolution of their complaint/dispute.
- Out of court settlements are to be processed through the LAPS. The LAPS must be a LAPS which is listed in OJK’s list of LAPS.
- Dispute settlements through a LAPS is confidential in nature. The decision of the LAPS regarding the dispute will not be published. The financial service institution concerned is required to abide by the decision of the LAPS.
Prior to the issuance of Regulation 1/2014, three LAPS had been established, namely, (i) Indonesian Capital Market Arbitration Board (Badan Arbitrase Pasar Modal Indonesia), (ii) Indonesian Insurance Mediation Board (Badan Mediasi Asuransi Indonesia), and (iii) Pension Fund Mediation Board (Badan Mediasi Dana Pensiun). To date no additional LAPS have been established. (by: Novario Asca Hutagalung)