Halo slips on fintech players in Indonesia

Jakarta Legal Aid Institute unable to share the names as at press time

• OJK can only take action against registered fintech players

THE Jakarta Legal Aid Institute (LBH Jakarta) has filed a complaint against 89 fintech players on allegations of unethical debt collecting methods, which was reported by 1,330 victims (as of Nov 25, 2018), to Indonesian Financial Services Authority (OJK).

LBH Jakarta public lawyer Jeanny Silvia Sari Sirait (pic, right) told Digital News Asia (DNA) that among the 89 implicated fintech players, 25 were registered with OJK.

However, she said that LBH Jakarta is only able to share the initials of the companies and not the complete names.

“There will be legal procedures that they have to follow. If they cooperate well from the first step, then it’s good. But if they do not, then there is a possibility we may disclose the names to the public.”

She said the initials of the 25 fintech companies registered with the OJK are, DR, RP, PY, TK, KP, DC, DI, RC,PG,UM, EC, CW, KV, DB,CC, UT, PD, PG, DK, FM, ID, MC, RO, PD, and KC.

Jeanny said that she received complaints from the 1,330 victims by phone calls and visits to the office and she will update DNA on the latest number of complaints.

Pressure on OJK to take action

Jeanny told DNA that she has had very high expectations of the OJK from the beginning. “We hope OJK is able to carry out its duties as stated in the OJK law. The aim of OJK is to provide regulation and supervision of all mechanisms, especially in Article 6, to the mechanism of financial services.

“Based on this, OJK cannot not limit which fintechs are registered or not. All financial services are under the responsibility of OJK, and it must regulate and supervise all financial services regardless of the conditions.”

She added that LBH Jakarta works based on the law, “but what happened was that OJK has not carried out the spirit of its governing law.”

Jeanny said that LBH Jakarta and OJK have met to discuss this issue. “During the meeting, OJK stated that it could only oversee registered online fintechs, as regulated by POJK 77/2016 (regulations under OJK). Then we said, how could OJK refer to POJK 77/2016 but ignore the OJK law. In the hierarchy of legislation, POJK is far below the OJK Law, and it affects the existence of OJK.

“Article 6 in the OJK Law states that OJK is responsible for all financial services and until this period, OJK only oversees registered fintechs, which does not refer to the law.”

DNA then contacted Indonesian Financial Services Authority (OJK) director of Regulation, Licensing and Supervision of Financial Technology Hendrikus Passagi to get his comments.

He said, “I have nothing to respond to, because what they convey to the media is only the initial statistics report and it is not a legal fact at all that can be used to crack down on cyber violations.

“Until now, they have never submitted a complete legal fact report to the authorities, so their efforts are actually nothing more than merely polemic and building unhealthy opinions, and may be ridden by other interests.

“Consumers in the fintech lending industry consist of fund owners or lenders, organisers, and borrowers. We are obliged to protect these three consumer groups simultaneously and fairly. Our obligation is to supervise and take action based solely on legal facts, and not just accept ‘Initial-based Statistical Reports’. This is what distinguishes the authority and media working mechanism.”

When asked what action will be taken by the OJK regarding this issue, he said, “regulators will never act only based on rumours in the media, especially only in the form of an initial statistics report.”

Jeanny however, says that if OJK fails in being cooperative, her party will be disappointed as she thought that government institutions are there to protect consumers.

“OJK’s duty is to protect the public. And the movements for civil society such as LBH Jakarta exist to support the government in protecting the public.

“If OJK is not cooperative with this, then I must say that it would be very unfortunate because it means OJK is no longer participative in the needs of the community and as a state institution. When a state agency is not participative, what else will be its function and existence?”

Jeanny added that there are at least 14 types of law and consumer rights violations in the complaints.

Legal violations experienced by victims are the spread of personal data, dissemination of information on devices, threats, fraud, slander, and sexual harassment through electronic media.

Other consumer rights violations include very high and unlimited interest, billing not only to borrowers or emergency contacts, fintech’s office contacts and locations are unclear, the borrower has paid but the loans are not deleted and billing continues to be intimidating as it is not updated on the system, the application is not accessible or even lost from the app store or play store when the date of the loan is due, billing is done by different people, taking almost all the information on the borrower's device and wrong virtual account for refund causing the interest to grow and billing intimidation continues.

What needs to be done by fintech players?

Jeanny hopes that fintech players will not violate the law or human rights in order to get profits.

“I understand that they are running businesses, but we hope they will not violate the law or human rights simply because of the desire to get personal or corporate profits and there must be an internal company system to overcome legal violations.”

DNA has contacted Kredivo and Uang Teman for clarification and at press time, was waiting for a reply.

Kredivo and Uang Teman are fintech players registered with OJK.