T

he Financial Services Authority (OJK) is completing the establishment of an agency that will take over resolution activities from the financial regulator in disputes between banks and their customers.

The agency, the Indonesian Alternative Agency for Banking Dispute Resolution (LAPSPI), will be part of a larger institution called the Indonesian Alternative Agency for Dispute Resolution (LAPS) that will start handling disputes in the insurance and capital market sectors on Thursday.

LAPSPI was established under an agreement signed in April this year by six banking associations, including the National Banks Association (Perbanas) and Foreign Banks Association (Perbina).
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'€œWe still have some cases that have yet to be resolved due to certain issues, such as the cases being outside the OJK'€™s remit, incomplete documents as well as no follow up response from customers.'€

'€œLAPSPI will fully operate early next year [with banking dispute resolution to be added later], featuring three services, namely adjudication, mediation and arbitration as stated in a 2014 OJK regulation,'€ OJK commissioner for consumer education and protection Kusumaningtuti S. Soetiono said in Jakarta on Thursday.

Kusumaningtuti said the agency would take over the OJK'€™s mediation function and allow customers to proceed further if they were not satisfied with pre-mediation held in the OJK, as the financial regulator could not perform adjudication and arbitration activities.

She said the agency would operate independently in its dispute-resolution activities, yet still under the OJK'€™s supervision and guidance.

'€œAfter the agency'€™s full establishment, the OJK will transform our mediation function to pre-mediation, which deals more with clarification and verification activities. Customers may go directly to the agency without the need to go for pre-mediation at the OJK,'€ she said.

Since the establishment of the OJK in 2013, Kusumaningtuti said, the financial regulator had managed 3,700 complaints in the banking, financial and capital market sectors, with 40 percent coming from banks as they had the most customers.

'€œWith banking most of the disputes are related to debt restructuring and collateral as well as payment systems. Since payment systems fall under Bank Indonesia'€™s [BI] supervision, the cases are therefore followed up by the central bank,'€ she said.

OJK consumer protection director Sondang Martha Samosir said of the 3,700 complaints, 700 occurred this year and the financial regulator had resolved about 90 percent of them.

'€œWe still have some cases that have yet to be resolved due to certain issues, such as the cases being outside the OJK'€™s remit, incomplete documents as well as no follow up response from customers,'€ Sondang said, adding that the OJK was obliged to complete all remaining disputes before the new agency was fully established.

Sondang said the OJK had almost completed the resolution of old disputes that were a legacy from BI'€™s mediation before transferring to the OJK, with most of them related to debt restructuring and asset auction issues.

Association of Payment Systems in Indonesia (ASPI) deputy chairman Isbandiono Subadi said the full establishment of LAPSPI could help banks that had complicated disputes with customers, including in the field of payment systems.

'€œHowever, we still hope that customers will be willing to resolve their problems with banks first, for instance when there are disputes in credit card transactions, because in most cases, the dispute are due to miscommunication,'€ he said.