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Guarding society: The call to regulate financial planners in Indonesia
By establishing clear boundaries between these two regulatory bodies, the P2PK can create specialized standards for licensing, certification and conduct for financial planners.
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Not your land: Jakarta Police spokesman Sr. Comr. Argo Yuwono (right) shows a fake land ownership certificate that was seized as evidence in a fraud case at a press conference. Investment scams have continued to deceive victims despite warnings from authorities. (JP/Rafaela Chandra)
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ndonesia has witnessed a surge in the number of financial planners offering their services to the public. While these professionals play an important role in helping individuals achieve their financial goals, in some cases they have had detrimental effects to consumers.
This article aims to shed light on the urgency to regulate the financial planner industry in Indonesia, beginning with a closer examination of cases in which their practices have caused harm. Subsequently, we will explore the legal vacuum in this area and the necessity for a clear separation of duties and authorities between the Financial Services Authority (OJK) and the Finance Ministry’s Financial Professional Development Centre (P2PK), both of which are instrumental in safeguarding the financial sector.
Over the last few years there have been numerous cases of financial planners engaging in fraudulent and deceptive practices. These unscrupulous individuals often exploit unsuspecting clients, promising unrealistic returns on investments or selling unsuitable financial products to maximize their commissions. Such actions have led to significant financial losses for innocent individuals, jeopardizing their financial security and future.
One such case involved a public figure who acted as a financial planner and who operated a scheme that drew in investors with the allure of unrealistic profits through companies that acted as investment management. However, as the scheme eventually collapsed, it left victims in financial ruin and eroded public trust in financial planning services.
These cases underscore the pressing need to regulate financial planners and protect the people from further harm. However, since the aforementioned case in 2020, policymakers have barely made efforts to improve regulations related to this profession, leaving a legal vacuum.
The current legal landscape in Indonesia lacks sufficient regulations and oversight for financial planners. Unlike financial service institutions, the profession of financial planner does not fall under the direct purview of any specific regulatory body, leading to significant gaps in oversight and accountability. This lack of clear guidelines has allowed unqualified individuals to pose as financial planners, deceiving vulnerable clients.
To address the existing legal vacuum and curb detrimental practices, there is an urgent need for a clear separation of duties and authorities between the OJK and the P2PK in the Finance Ministry. The OJK, as the primary financial services regulator, should continue to focus on overseeing financial institutions and their products. The P2PK should take on the role of regulating the supporting professions within the financial sector, with a particular emphasis on financial planners.
