Illustration of financial technology (fintech) (Shutterstock/File)

A group of financial technology (fintech) lenders wants to help grow a healthier lending industry and protect consumers by setting out a strict code of conduct for its members.

The Indonesian Fintech Lenders Association (AFPI) would help stimulate the industry, which only gained government recognition three years ago, by providing risk management certification, public education campaigns and a compulsory code of conduct, which should be uploaded to the AFPI website soon.

AFPI chairman Adrian Gunadi said the association had been established to ease the Indonesian Fintech Association’s (AFTECH) workload in dealing with fintech companies that provide lending services, including peer-to-peer (P2P) lending, crowdsourcing and digital credit cards.

Such lenders account for 30 percent of all licensed fintech companies, whereas the remaining 70 percent are companies engaged in, among other things, e-payments, wealth management and insurance.

“We started this association because we wanted the fintech lending industry to get off to a good start,” said Adrian, who is also the founder of P2P platform Investree.

The AFPI also helped protect consumers – thereby growing its user base – by maintaining an online list of registered lenders and a consumer complaint center named Jendela (window).

The center receives complaints either through its email pengaduan@afpi.or.idor its toll-free hotline 150-505, which is active from Monday-Friday from 8 a.m. to 5 p.m.

With regard to the code of conduct, AFPI deputy chairman Sunu Widyatmoko urged consumers to take note of Section B1, which stipulates that a fintech lender’s interest rates cannot exceed a flat rate of 0.8 percent a day, while penalties cannot exceed 100 percent of the principal.

Lenders that defy these rules can be accused of practicing predatory lending.

“The AFPI is also building a database of problematic borrowers. If a borrower does not pay off a loan within 90 days, they will be blacklisted,” he said.

Meanwhile, Financial Services Authority (OJK) commissioner Riswinandi said his organization supported the creation of the AFPI, because it would assist the OJK, whose tasks included overseeing fintech, in better regulating Indonesia’s sprawling fintech scene without curbing financial inclusion.

“Fintech grows rapidly in Indonesia. We now have 99 licensed lenders, but there are 177 lenders waiting to be licensed,” he said.

The OJK recorded total fintech disbursements of Rp 22.6 trillion (US$1.57 billion) last year, exceeding its predicted Rp 20 trillion.

The rapid growth gave rise to unlicensed fintech companies, some of which resort to intimidation or cyberbullying to collect debt from customers

A taxi driver committed suicide in South Jakarta last month after being unable to pay his online debt.

The OJK has so far released three fintech regulations to protect consumers: Regulation No. 77/2016 on P2P lenders, Regulation No. 34/2018 on equity crowdfunding and Regulation No. 13/2018 on fintech innovation, which serves as a legal umbrella for future laws.

However, the OJK also firmly believes that fintech can help push financial inclusion from 67 percent last year to 75 percent by the end of this year and is working closely with the two fintech associations to avoid over-regulating the industry.