ICC Raises Online Lending Case Status To Investigation, Names 44 P2P Lending Providers As Reported Party.

Jakarta (27/10) The Indonesia Competition Commission (ICC) continued the online lending case to the investigation stage after going through an initial investigation process since October 5, 2023. In this investigation stage, the ICC has named 44 (forty-four) peer-to-peer (P2P) lending providers as the Reported Party for alleged violations of Law No. 5 of 1999, specifically Article 5 related to price fixing. At the investigation stage, which was determined through the Commission Meeting on October 25, 2023, the ICC will summon the parties, including the Reported Party, witnesses, or relevant experts, to collect sufficient evidence related to the alleged violation.

For information, the ICC has completed conducting a preliminary investigation into alleged violations committed by online lending business actors who are members of the Indonesian Joint Funding Fintech Association (AFPI). During this stage, it is known that AFPI has issued a Code of Conduct for Responsible Information Technology-Based Money Lending Services, which regulates the determination of the total amount of interest, loan fees, and other fees (other than late fees) that do not exceed a flat interest rate of 0.8% per day, calculated from the actual amount of the loan received by the loan recipient. In 2021, the rate is set not to exceed 0.4% per day. Each AFPI member is required to sign an integrity pact in which the member is obliged to abide by the guidelines created by the association.

In the initial investigation, ICC has conducted various information gathering activities, including written requests for information from AFPI members and requests for information from five (five) P2P lending providers, AFPI, and the Financial Services Authority (OJK). Through this process, the ICC has obtained one piece of evidence of an alleged violation of Article 5 and fulfilled the requirements to proceed to the investigation stage. The ICC also found that the purpose of AFPI’s regulation on the determination of the total amount of interest, loan fees, and other fees is to protect consumers from predatory lending, or the practice of providing loans that impose interest terms and/or fees that are not reasonable for the loan recipient or do not pay attention to the ability to repay the loan recipient.

The investigation process will take place behind closed doors for the next 60 (sixty) days, and it is not closed to the possibility of extending the investigation period or adding the Reported Party, depending on the evidence obtained. In the process, ICC will prove whether the behavior of several P2P lending providers that apply the same interest rate is the result of an agreement among the providers. In principle, in a competitive market, each P2P lending business actor will run its business more efficiently so that it is able to set interest rates that are lower than those of its competitors and provide various choices of facilities and interest rates for consumers.