As part of OJK’s responsibility to create a fair, well-regulated, and efficient capital market and to implement consumer protection in capital market, Indonesia Securities Investor Protection Fund (Indonesia SIPF) was established in 2012. Prior to Indonesia SIPF establishment, a study conducted by OJK recommended that the existence of investor protection fund could boost investor confidence in Indonesia Table 8 Deposit distributions in Indonesia banking sector
Amount of deposits Number of accounts
% Amount of deposits (billion 1DR)
%
N < Rpl00 mio 195,002,534 97.84 722,355 14.74
Rupiah 194,238,783 99.61 707,832 97.99
Foreign currency 763,751 0.39 14,523 2.01
Rp100
mio < N Rp200 mio
1,952,583 0.98 274,016 5.59
Rupiah 1,853,513 94.93 259,816 94.82
Foreign currency 99,070 5.07 14,200 5.18
Rp200
mio < N Rp500 mio
1,313,266 0.66 422,787 8.63
Rupiah 1,221,896 93.04 393,947 93.18
Foreign currency 91,370 6.96 28,840 6.82
Rp500
mio < N Rpl bio
527,268 0.26 387,583 7.91
Rupiah 483,987 91.79 357,323 92.19
Foreign currency 43,281 8.21 30,260 7.81
Rpl bio < N Rp2 bio
262,911 0.13 373,972 7.63
Rupiah 236,923 90.12 337,991 90.38
Foreign currency 25,988 9.88 35,981 9.62
Rp2 bio < N Rp5 bio
157,655 0.08 490,816 10.02
Rupiah 141,182 89.55 440,089 89.66
Foreign Currency 16,473 10.45 50,727 10.34
N > Rp5 bio 85,285 0.04 2,228,785 45.48
Rupiah 69,532 81.53 1,661,261 74.54
Foreign currency 15,753 18.47% 567,524 25.46
Total 199,301,502 100.00 4,900,314 100.00
Rupiah 198,245,816 99.47 4,158,259 84.86
Foreign currency 1,055,686 0.53 742,055 15.14
SourceLembaga Penjamin Simpanan (2017)
capital market. Investor confidence is one of the important elements in the devel- opment of a capital market. Indonesia SIPF was established by three shareholders, consist of Indonesia Stock Exchange, Kliring Penjamin Efek Indonesia, and Kustodian Sentral Efek Indonesia. All of Indonesia SIPF shareholders are self-regulatory organizations in Indonesia capital market. The Indonesia SIPF membership is mandatory to all brokers, dealers, and custodian banks. Members are obliged to pay initial membership fee Rp100 million (only paid once during the registration) and annual membership fee 0.001% of monthly average of investor’s assets in the prior year.
Indonesia SIPF’s core mission is to intensify the capital market investment security by establishing investor protection fund. Indonesia SIPF protects investors from losing their assets if the custodian banks or brokers/dealers failed to return the assets to the investors. Investors are not charged any fee by Indonesia SIPF to be covered under this protection scheme. In the case of Indonesia SIPF member failed to return investor’s asset, investors reserve the right to get up to Rp100 million per investor and custodian banks entitled to claim up to Rp50 billion per bank.
Indonesia SIPF sets three main criteria to determine eligible investor in the pro- tection scheme as follows:
a. Investor invests their fund and has an account at SIPF member b. Investor is registered by SIPF member on a sub-account at KSEI c. Investors has a single investor identification number from SIPF member.
Indonesia SIPF covers investor assets regardless of investor’s nationality or country of residence. As long as investor assets are registered in Indonesia SIPF member account. Indonesia SIPF protection scheme is not applicable to investor that falls into one of these criteria:
a. Investor is engaged in any action that causing the loss of assets;
b. Investor is majority shareholder, board of directors, board of commissioners, or one level below board of directors officials of custodians; and
c. Investor is affiliated to any parties as mentioned in point a and b.
Investors and Indonesia SIPF should report any loss events to OJK, because all SIPF members (brokers/dealers and custodian banks) are under OJK’s supervision.
OJK verifies the asset loss report using three criteria as follows:
a. Investor asset loss occurs;
b. Custodian failed to repay the lost assets;
c. Custodian is unable to continue its operation and its business license is under consideration to be revoked.
If the event meets those criteria, OJK will issue a legal written statement to Indonesia SIPF. The next step is internal verification by Indonesia SIPF before making payments for asset loss claims. Indonesia SIPF has set the formula to determine the lost asset value as follows:
• Assets in the form ofequity
= number of securities (in unit) * average closing price (where transaction exists for the last six months prior to the issuance of OJK written statement
• Assets in the form ofdebt instrument or Sukuk
= number of securities (in unit) * average fair market price issued by the bond pricing agency in the last six months
• The value of asset inany form other than the aforementioned is calculated usingfair asset pricing method
As of February 3, 2017, Indonesia SIPF has been managing Rp126 billion in investor protection fund. The investor asset value covered by Indonesia SIPF has reached Rp3.576 billion. Indonesia SIPF members consist of 19 custodian banks and 108 brokers/dealers with 660.796 securities sub-accounts (SIPF2017).
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www.ojk.go.id
Rofikoh Rokhimis an associate professor at the Faculty of Economics and Business, Universitas Indonesia. She holds a Ph.D. in Economics from UniversitéParis 1 Panthéon-Sorbonne, France.
She is one of the founding members of the International Academy of Financial (IAFICO) and Indonesian Financial Association (IFA). Her research interests include capital market, banking, small medium enterprises development, microfinance, financial inclusion as well as financial policy and regulation. Her work has been featured in many academic journals. Apart from academics, she is also serving as advisory board member of Yayasan Cinta Anak Bangsa, a non-profit organization focusing on youth drug prevention programs and women impowerment.
She is also advisor of several projects of Indonesian government for enhancing offinancial industry and consumer protection.
Wardatul Adawiyahis currently a lecturer and researcher at Faculty of Economics and Business, Universitas Indonesia. She received a master degree infinance from Daegu University, South of Korea. She began her specialization infinancial analysis and modeling that led to a seven-year of experiences in several consulting firms and positions as financial analyst, researcher and also involved in various research projects of government and private companies. Her research interests include capital market,financial inclusion andfinancial consumer protection. Her interest in capital market allowed her to be a part of creator of The Indonesian Capital Market Institute (TICMI) and she prepared the curriculum. She later appointed as a secretary of Indonesia Finance Association (IFA).
Ida Ayu Agung Faradynawatiis a lecturer and researcher at the Faculty of Economics and Business, Universitas Indonesia. She received a master degree in Money, Banking, and Finance from University of Birmingham, United Kingdom. She is particularly interested in financial inclusion, infrastructure financing, and SME development topics. She has worked in various research projects with government and private companies.
Financial Consumers and Applicable Remedies: A European and Italian Framework
Vincenzo Senatore
Abstract In Europe, general legislation requires protection of the economic interests of consumers. This includes, for instance, the consumer protection from financial services, misleading advertising and unfair contract terms. However, only after the globalfinancial crisis, the European Union (EU) has become aware of the lack of transparency, poor handling of conflicts of interest, over-indebtedness, and low awareness of risks of the consumers in dealing with financial services. This paper aims to investigate thefinancial knowledge and overconfidence in Europe, and to provide an overview of consumer protection policy in EU. Here, it will be analyzed the EU regulatory framework, whose aim is to ensure the stability of the financial markets and to establish specific and common rules for banks and investments companies among the Member States. Furthermore, it deals with protections offinancial consumers in the Italian legislation and within a European context. It concludes providing the Italianfinancial system as best example of crisis management and resolution, by providing out-of-court settlements, collective redress and crisis management procedures, with the aims to establish a systemic stability andfinancial consumers’confidence in the bank system.
Keywords Financial consumerFinancial consumer protection
Literacy, ADR Out-of-court settlementAccess to justice Compulsory
mediationClass actions
V. Senatore (&)
GSA Law Firm, Rome, Italy e-mail: vsenatore@studiolegalegsa.it
©Springer Nature Singapore Pte Ltd. 2018
T.-J. Chen (ed.),An International Comparison of Financial Consumer Protection, https://doi.org/10.1007/978-981-10-8441-6_8
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1 Introduction