Legal Protection for Investors in the Capital Market

The protection of share transactions in the capital market is held by the Financial Services Authority (OJK) as the protector of investors, and it is both preventive and repressive in nature.

Preventive Protection

Article 28 of Law Number 21 of 2011 on the Financial Services Authority (the OJK Law) authorizes the OJK to take measures to prevent losses to Consumers and the public. These include:

• providing information and education to the public on the characteristics of the financial services sector, its services, and its products;
• requesting Financial Services Institutions to cease their activities if such activities potentially harm the public; and
• other measures deemed necessary in accordance with the provisions of laws and regulations in the financial services sector.

Article 29 of the OJK Law adds Consumer complaint services, under which the OJK:

• prepares adequate tools for the service of complaints from Consumers who are harmed by actors in Financial Services Institutions;
• establishes a mechanism for such complaints; and
• facilitates the settlement of such complaints in accordance with laws and regulations in the financial services sector.

Repressive Protection

Article 30 paragraph (1) of the OJK Law authorizes the OJK to carry out legal defense for the protection of Consumers and the public. This includes ordering or taking certain actions against a Financial Services Institution to settle the complaints of harmed Consumers, and filing a lawsuit:

• to recover the assets belonging to the harmed party from the party causing the loss, whether under the control of that party or under the control of another party acting in bad faith; and/or
• to obtain compensation from the party causing the loss to the Consumer and/or the Financial Services Institution as a result of a violation of laws and regulations in the financial services sector.

Under Article 30 paragraph (2), compensation obtained through such a lawsuit may only be used for the payment of compensation to the harmed party.

In summary, the OJK protects investors preventively through information, education, requests to cease harmful activities, and complaint mechanisms, and repressively by filing lawsuits to obtain compensation for the harmed party.