Dispute resolution for banking customers<\/p>\n
Indah Suksmaningsih, Jakarta<\/p>\n
Greatly tempted by an aggressive marketing campaign by a major
\nstate bank that was promoting the great benefits of credit cards,
\nabout 100 government officials in Wonosari, Yogyakarta, last year
\napplied for the cards.<\/p>\n
A couple of months later the promised credit cards arrived
\ntogether with bills for the annual fee. How painfully surprised
\nthe officials were after finding out that they had to pay the
\nbank, as the credit card issuer, a Rp 120,000 (US$13.30) annual
\nfee even before they used what the bank had previously called \"a
\nshopping without cash\" instrument.<\/p>\n
Angered by the bills, most of the new cardholders refused to
\npay. But the next month other bills followed, this time with an
\nadded extra -- late payment charges. But they stubbornly refused
\nto pay, thereby causing a dispute with the bank.<\/p>\n
It appears that the civil servants, most of whom earn less
\nthan Rp 1.5 million a month, were not well informed about their
\nobligations and rights as cardholders. There have been numerous
\ninstances where consumers have been misled to apply for a credit
\ncard without considering their personal financial situation.<\/p>\n
The problem is that, unlike in Australia or Malaysia,
\nIndonesia has no mediation institute or ombudsman where bank
\ncustomers can go to file complaints and amicably resolve disputes
\nover banking services.<\/p>\n
In Australia, such an ombudsman was established 14 years ago.
\nMalaysia has the Banking Mediation Bureau, which was established
\neight years ago. But as far as such a mediation agency and the
\nprotection of bank customers' interests are concerned, Indonesia
\nhas been quite slow to respond.<\/p>\n
Bank Indonesia is still in the early stages of preparations
\nfor the establishment of a banking mediation agency or bureau,
\nwhich is urgently required in view of the steep rise in the
\nnumber of disputes between customers and their banks.<\/p>\n
Each year since 1996, the Indonesian Consumers Organization
\n(YLKI) has received no less than 100 complaints from bank
\ncustomers (credit card or ATM cardholders) related to double
\nbilling, miscalculation of interest and unethical debt collection
\npractices.<\/p>\n
The number and variety of bank transactions have increased
\ndramatically in recent years, thereby heightening potential
\ndisputes and consumer complaints. The latest Bank Indonesia data
\nshows that the number of credit cardholders increased from 1.36
\nmillion in 1996 to 4.5 million in 2003, with card transactions up
\nfrom Rp 5.5 trillion to Rp 9.8 trillion. Within this period the
\nnumber of credit card issuers increased from 11 to 17 banks.<\/p>\n
The closest place for consumers to go to redress their
\ncomplaints is the customer service departments of their
\nrespective banks, but these departments tend to act in a
\ndefensive manner and most often act in favor of the banks.
\nCertainly, these bank officers may get fired if most complainants
\nwon their cases.<\/p>\n
Where should then these unfortunate consumers go? To the
\ncourts? This conventional dispute resolution method does not seem
\nto be suitable for cases where low values of money are involved.
\nIt involves complicated administrative procedures, is time
\nconsuming and expensive. To the police? Consumers may have to
\nspend more than the amount disputed to get the police to handle
\ntheir complaints.<\/p>\n
Most cases of banking disputes reveal that there is an
\nimbalance in the bargaining power between the parties concerned.
\nBanks tend to hold a much stronger position than customers in any
\ngiven banking transaction. This leads to exploitation of power,
\nthe bank exploiting the powerless -- the consumers.<\/p>\n
The fact that consumers are increasingly discouraged from
\nseeking redress has driven the YLKI to propose to Bank Indonesia
\nthat it look into the establishment of a banking mediation bureau
\nin Indonesia.<\/p>\n
A visit by YLKI to the Banking Mediation Bureau in Malaysia
\nand a similar institute in Australia two years ago invited
\nsympathy and support in helping Indonesia to establish an
\nefficient, fair and affordable dispute resolution agency.<\/p>\n
Peter Kell from the Australian Consumers Association stated
\nthat \"... the banking Ombudsman has become a well-respected part
\nof the financial services scene. It has ensured that consumers in
\nthe banking sector have access to mediation and dispute
\nresolution that is affordable and accessible ...\".<\/p>\n
Some of the complaints the YLKI has received from consumers
\nhave been handled well by the banks involved. However, some banks
\nchose to ignore the correspondence sent by the YLKI on behalf of
\naggrieved customers since the YLKI does not have the authority to
\nforce the banks to respond in these situations.<\/p>\n
The YLKI does, though, possess one effective tool for making
\nbanks pay attention to consumer interests -- YLKI's credible
\nreputation and ability to inform the public about which banks
\nhave or do not have good track records in customer service and
\nthe resolution of consumer complaints.<\/p>\n
Learning from the YLKI's experience, data retrieved through
\nthe effective handling of consumer complaints can be used by the
\nbanking industry to improve customer service and the industry's
\nreputation, thereby retaining current customers and attracting
\nnew ones.<\/p>\n
A particular ATM case serves as a good example. A consumer
\ncomplaint about a double withdrawal in an ATM transaction showed
\nthat the ATM machine was not always reliable. The private bank
\nadmitted during the mediation process facilitated by the YLKI
\nthat an error with the ATM had taken place. We thus assumed that
\nthis had occurred to more than one consumer. It is therefore
\nobvious that for systematic problems one single complaint filed
\nmakes a difference by drawing attention to the existence of such
\nproblems.<\/p>\n
One of the benefits consumers could enjoy from a national
\nmediation bureau is the application of standardized dispute
\nresolution procedures for any given banking complaint. This would
\nbe a step forward toward equal treatment of consumers.<\/p>\n
Going back to the credit card issue, the number of cards is
\nnot the issue, but rather the main issue is how the cards are
\nused.<\/p>\n
Data YLKI collected has revealed that consumers have not been
\nacting responsibly or taking care in their credit card
\ntransactions. There is a significant trend among consumers not
\nto settler their credit card bills on or before the due date.
\nThe consumer is then faced with high interest rates for late
\npayment. On average, consumers pay Rp 25,000 per month in late
\npayment charges.<\/p>\n
Consumers must pay another fine when their credit card
\nspending exceeds their credit ceiling. To us, this is a trap to
\ngenerate more money from consumers. There must be a way to warn
\nconsumers that their credit card spending has gone beyond the
\nallowed amount or to just stop access when the spending reaches
\nthe maximum amount!<\/p>\n
Credit card issuers behave like any other moneylender. They
\nallow you the option to pay back in installments. This is where
\ncard issuers make money and how you are snared. The cardholder
\nends up paying exorbitant interest of between 1.5 percent and 2
\npercent per month on the outstanding balance. Annualized interest
\ntotals 18 percent to 24 percent. Credit control ultimately lies
\nin the hands of cardholders, not the government or the card
\nissuers.<\/p>\n
The writer is chairperson of the YLKI.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/dispute-resolution-for-banking-customers-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }