Indonesian Joint Funding Fintech Association Sets "Cost Ceiling" for Consumer Protection

The Indonesian Joint Funding Fintech Association (AFPI) establishes a loan credit ceiling standard to protect consumers. This agreement was made unanimously by AFPI members and is ready to be implemented. There has been no further discussion with OJK whether this credit limit will be made in an official policy.

The cost ceiling in question means that if the loan has passed the maximum collection period of 90 fingers from the payment deadline, the loan and principal costs are guaranteed not to increase.

For example, if a consumer has a loan of IDR 2 million and he has difficulty in repaying it, the maximum total loan along with the total costs will stop on the 90th day. The obligation to be paid is the loan principal (Rp 2 million) + fees and interest up to a maximum of 90 days.

With the cost ceiling, AFPI ensures that the vision to provide credit education to the public and ultimately increase financial inclusion can be achieved.

"AFPI cares about customer protection. For that we have agreed to set a cost ceiling. So the total fee paid does not exceed 3-4 times the nominal loan, so as not to be suffocated," said AFPI's Deputy Chief Executive for Multipurpose Funding Aidil Zulkifli, Tuesday. (6/11).

The mechanism for implementing this cost ceiling, he continued, was left to each organizer. Based on data from AFPI, there are several hosting platforms that have already stopped fees after passing the 30th day, including Uang Teman and Pendanaan.com.

"With this application, consumers are protected from worries about burdensome costs. Our presence in the market is to provide solutions and access for consumers who are not or have not been served by banking."

According to Aidil, this agreement has been brought to the OJK for approval. Regulators are also happy with initiatives like this, although there is no regulation that legally regulates the cost ceiling. There is also no possibility whether the regulator will lower it in the form of a policy to make it stronger.

Based on OJK data as of September 2018, NPL data for services p2p loans and payday loan reached 1,2%.

In addition to setting a cost ceiling, the association also has an agenda for its members to obtain ISO/ICE 27001 certification related to the information handling management system, Minister of Communication and Informatics Regulation No. 4/2016. The implementation of this certification is part of risk management and maintaining data security to consumers.

Not only that, the association will also implement standardization and certification for the billing process carried out by AFPI members to consumers. Where the billing process must be in accordance with the billing code of ethics that has been approved by all AFPI members. Collection agencies must have a certification issued by the association.

As with the provision of credit, payment mechanisms and consequences for failure to pay will also be applied. The association emphasizes that consumers must also be smart and careful when applying for loans. Consumers are required to identify whether the loan provider is a company registered with the OJK and check it on the OJK official website.

Customer data collected by the association will be collected and used jointly with national banks. So that it can help the financial industry as a whole. The vision to increase financial inclusion can also be achieved more quickly.

Respond to negative news from LBH

The association's initiative in issuing these statements is in response to negative issues affecting the p2p lending fintech industry related to consumer complaints to the Legal Aid Institute (LBH). It is said that there have been 283 online loan victims since 2016. To accommodate all complaints, LBH has also opened a victim complaint post.

Consumers complain by billing from providers that are unethical and violate the provisions, contact all contacts stored on consumers' cellphones, high interest rates, and so on. The aftermath of this matter is considered detrimental to AFPI because all these actions were not carried out by association members. The stubborn and illegal p2p lending players have the initials UC, DR, KP, VL and RN.

"The association has not received any complaints regarding billing violations by our members, either from AFPI or AFTECH," said AFPI deputy chairman Sunu Widiatmoko.

Sunu considers this issue detrimental because it damages the good name of p2p lending, which industry players have worked so hard to pioneer from the start. Therefore, the association will report this to the police for further action. Not only that, visit LBH for further education regarding the difference between legal and illegal fintech.

He emphasized that all practices carried out in the field by members are fully supervised by OJK and in accordance with applicable regulations.

"AFPI objected and felt aggrieved. Even though from the start we wanted to build good governance for the p2p lending industry according to regulations."

AFPI has also examined evidence from both parties. It was concluded that the organizers who were not members and were illegal did not have the good faith to do business in the long term in Indonesia. AFPI even accused the player of deliberately taking away customer funds and leaving Indonesia.

"I've heard the tape evidence. The words that were said were completely unethical and inappropriate."

Sunu said the association closed itself and was not willing to accept the illegal player as an official member. He said, if the players have good intentions, the first thing they should do is register themselves officially with the new OJK to the association.

"All players can register with OJK, now it's just a matter of whether their intentions are good or not because this is only a matter of administration. Why should they embrace [as members] if their intention is to hit and run customers' money and violate the law."

Sunu also emphasized that this association is not something exclusive, so it is ready to embrace anyone with good intentions.

The association is ready to cooperate and assist LBH and the authorities in solving problems experienced by consumers. Currently there are 73 members of AFPI organizers and all of them have been registered with OJK.