Consumer Protection in Financial Service Business: The Prohibition of Using Force in Debt Collecting
General Overview
Due to the Corona Virus Disease 2019 (“Covid-19”) pandemic, many people lost their jobs. The loss of employment results in the loss of revenue or earnings but the same does not go for the expenses. This condition leads to people taking out loans from financial institutions (both legal as well as illegal institutions) in order to cover the expenses for their daily lives. The problem arising from the loans made to illegal institutions is the illegal ways of claiming their debts from the consumer such as the invasion of personal data, blackmail, as well as the use of violence. These kinds of illegal ways of claiming debts by debt collectors are now regulated and prohibited by the Financial Service Authority (Otoritas Jasa Keuangan or “OJK”) through the OJK Regulation No. 6/POJK.07/2022 concerning Community and Consumer Protection in the Financial Services Sector ("OJK Reg 06/2022").
This ARMA update will discuss the substance of OJK Reg 06/2022 which will discuss prohibited acts in debt collecting.
Debt Collecting
Currently in Indonesia, financing service business is legally acknowledged with the presence of OJK Regulation No. 35/POJK.05/2018 concerning Business Organization of Financing Company ("OJK Reg 35/2018"). Further, OJK Reg 35/2018 regulates what steps must be taken in order to collect debts arising from the financing. For instance, a warning letter that consists of at least (i) the number of days since the debt becomes outstanding, (ii) the main debt, (iii) interest resulting from the outstanding debt, and (iv) fines resulting from the debt. Moreover, OJK Reg 35/2018 also regulates the general process of collecting debts with or without collateral as well as cooperation between the financing company and a third party to assist in collecting debts loaned by the financing company.
Consumer Protection in Financial Service Business (In Terms of Debt Collecting)
Newly enacted OJK Reg 06/2022 regulates that Financial Service Businesses are obligated to have and enforce a written policy regarding consumer protection. In addition, it is also regulated that Financial Service Businesses must prevent their Directors, Board of Commissioners, employee, and/or any third party that works for or with the business to enrich themselves or any other party and/or abuse their authority or any other opportunity gained due to their position in the business that could lead to the consumer suffering damages.¹ Further, in the explanation of this regulation, it is explained that examples of abusing authority or any other opportunity to their position in the business are but not limited to selling or trading consumers' personal data without consent from the owner themselves or the use of force in collecting debts.²
Other than the use of physical force, OJK Reg 06/2022 also prohibits certain acts to be done by Financing Companies, which include (i) sharing consumer's personal data with a third party, (ii) forcing the consumer to agree to the sharing of their data in order to use the application of the financing company, (iii) use a consumer's data that has ended their product usage, (iv) use a consumer's data that their financing has been rejected by the company, and/or use a consumer's data that rescind their application for financing.³ These types of prohibited acts have been used by illegal financing companies (pinjaman online illegal) to collect debts from consumers. The leakage of personal data in order to blackmail consumers to pay their debt to the financing company has been a major issue since the Covid-19 pandemic.
Other than protecting the consumer in terms of debt collection, OJK Reg 06/2022 also regulates consumer protection in terms of personal data protection. Aligned with the newly enacted Law No. 27 of 2022 concerning Protection Data Protection, financing companies are obligated to guarantee the security of personal data of the consumers. Further, if the financing company wishes to use consumer's personal data to undergo their business, the financing company must obtain written or recorded consent beforehand from the consumers that they have agreed to give their persona data and notify the consumers of the source of data and/or personal information obtained by the financing company.
Article 7 of the OJK Reg 06/2022
Elucidation of Article 7 of OJK Reg 06/2022
Article 11 of OJK Reg 06/2022
Disclaimer:
This client update is the property of ARMA Law and intended for providing general information and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. ARMA Law has no intention to provide a specific legal advice with regard to this client update.
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