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OJK finalizes fintech customer protection regulation
The Financial Services Authority (OJK) has said it is finalizing a set of regulations on financial technology (fintech) designed primarily for customer protection
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he Financial Services Authority (OJK) has said it is finalizing a set of regulations on financial technology (fintech) designed primarily for customer protection.
The regulations will serve as a legal umbrella that encompasses information transparency and safety for customers of various fintech, including peer-to-peer (P2P) lending and equity crowdfunding platforms, according to OJK deputy board commissioner Nurhaidah.
“The regulation will comprise an innovation review, regulatory sandbox and public trial,” she said recently, adding that the law was expected to be issued in late August along with the opening of the OJK-run fintech center.
Nurhaidah said the legal umbrella would complement a regulation already in place on fintech stipulating a peer-to-peer lending mechanism — as it would emphasize customer protection, not only in P2P lending but also crowdfunding, through a series of rigorous regulatory trials as specified in the new law.
“We will make it mandatory for new fintech enterprises to pass our regulatory sandbox on the basis of usefulness and safety for customers in order to register at the OJK,” she said.
On account of the ever-changing nature of technological innovations, the OJK may consider proposing another set of regulations for fintech entities that fell into categories outside of P2P lending and crowdfunding, Nurhaidah added.
In the first half of 2018, financing through P2P lending increased by 189 percent year-on-year (yoy) to Rp 7.6 billion (US$ 527,182) in transactions, with funds channeled to more than 1.1 million people.
Indonesian Fintech Association (Aftech) head and CEO of P2P lending platform Modalku, Reynold Wijaya, responded positively to the planned regulations.
“We always support regulators. From what we’ve seen so far, the OJK always puts innovation front and center without risking customer protection,” he told The Jakarta Post.
Modalku offers transparent services to ensure customer protection in compliance with the 2016 regulation, he added.
“One of the fundamental policies of our company is to always be transparent and upfront with customers. For example, we always disclose statistics and financial performance to the public,” Reynold said.
Aftech previously revealed its final draft of a code of ethics for its members, which guided them how to responsibly conduct business.
The code of ethics includes several requirements, including information disclosure and loan mechanisms, rights and obligations of the lenders and loan recipients, disclosure of non-performing loans (NPL), obligation to improve financial literacy and inclusion, as well as sanctions for fintech companies that violate the code, among other aspects.
The document was approved by the OJK last month, according to Aftech.
Aftech financial inclusion task force coordinator Aldi Haryppratomo, also CEO at electronic payment service Go-Pay, said the association would actively supervise how its members implemented the code. (rfa)
