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Indonesia bans use of superlatives in banking promos
Publication Date : 07-08-2014
Indonesia's Financial Services Authority has issued a directive to govern the advertising practices of financial companies in the country.
The directive provides for 32 specific "do's" and "don'ts" to follow when preparing for advertising materials for financial companies.
This forms part of an OJK law on customer protection that was published in 2013 and is a follow-up to a June 2014 letter that prohibited promotional efforts via text messages and telephone calls.
According to the directive, advertisements for financial products or services must not contain superlative words, such as “the most”, “the number one”, “the only one” and “top”. Companies that can provide evidence in defence of such claims, however, are exempt from the regulation.
“They can use survey results to support their claims, but the survey companies [used] must be legitimate, relevant to the industry and the results must be relatively new. Companies cannot use results that are too old,” said Anto Prabowo, the OJK director responsible for the development of customer protection policy.
He added that information pertaining to a source’s “reputation” had to be made easily visible on any promotional material.
Besides superlatives, the circular also bans the use of institutional testimony regarding products or services and prohibits firms from saying “while stocks last” when referring to promotional gifts.
Testimonies must also be made by individuals and be validated by a written and signed statement.
Regarding gift promotions, the directive requires companies to clearly state the number of gifts on offer and the duration of the promotional period.
The implementation of the circular will be carried out in phases and failure to comply with it will result in warnings and revocation of product licenses, according to Anto.
However, he insisted that the OJK — which supervises banking, non-banking and capital market industries — was not attempting to obstruct firms’ operations by issuing the directive.
“We want them to be more transparent so that consumers, who still have low levels of financial literacy, will not be led into making faulty decisions,” Anto said.
The latest statistics from the OJK may reflect low levels of financial literacy among Indonesian consumers. From the beginning of the year through Aug. 1, the OJK call center received 11,851 total calls composed of 1,446 complaints, 1,455 information reports and 8,950 questions.
“We still get questions about how to calculate interest rates,” he said.
Call numbers are up significantly from 2013, when just 1,902 calls reached the center.
The OJK claimed that it had sought input from business players and other stakeholders, such as the Indonesian Consumers Foundation (YLKI), the National Consumer Protection Agency (BPKN) and the Indonesian Advertising Council (DPI).
Contacted separately, Dodit Wiweko Probojakti, Bank Negara Indonesia’s (BNI) head of consumer products and retail division, said that the lender had been providing more thorough information on its website.
“They [consumers] can directly refer to our website for detailed information regarding terms and conditions,” he said, adding that similar explanations were available on advertisements, indicated by an asterisk.