Stronger and Clearer Supervisory Powers: A Look at OJK’s New Regulation on Written Orders

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Authors

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Background

To enhance regulatory consistency and strengthen enforcement across the financial sector, the Financial Services Authority (Otoritas Jasa Keuangan or “OJK”) issued OJK Regulation No. 31 of 2024 on Written Orders (“OJK Reg 31/2024”). This regulation consolidates and replaces several previous rules, introducing a more principle-based approach to OJK’s supervisory role. It also reflects the broader reforms under Law No. 4 of 2023 on the Development and Strengthening of the Financial Sector (known as “P2SK Law”) and the amended provisions of Law No. 21 of 2011 on the OJK (“OJK Law”).

Key Provisions

1. Broader and More Unified Scope

   OJK Reg 31/2024 applies across all financial service sectors and enables OJK to issue written orders requiring institutions or individuals to take or refrain from certain specific actions. These orders are intended to protect consumers, mitigate systemic risks, and ensure regulatory compliance.

2. Who Can Receive a Written Order?

   OJK may direct written orders to: ¹

   1. Financial services institutions (Lembaga Jasa Keuangan or “LJK”) including banks, insurers, pension funds, financing companies, securities companies, and fintech entities.
   2. Related parties, such as main parties (e.g. majority shareholder and board of management members), affiliates of LJK, other financial sector companies, and issuers or public companies.

3. Procedure and Enforcement

   OJK has the authority to issue written orders either: ²

   1. After providing written instructions, or
   2. Directly, in urgent or high-risk situations involving significant losses, regulatory breaches, or criminal conduct.

   Recipients of a written order are expected to submit an action plan and periodic implementation reports. ³ A final fulfilment report must be submitted no later than 2 (two) business days after the completion of the order. ⁴

4. Specific Authority under P2SK Law

   Under Article 8A of the amended OJK Law as introduced by P2SK Law, OJK now holds the authority to mandate mergers, acquisitions, and/or other corporate actions (such as integration and conversion) for LJKs, where necessary for institutional restructuring.

5. Sanctions for Non-Compliance

   Failure to comply with a written order may subject the recipient to administrative sanctions, including fines, restrictions on business activities, and even license revocation. In severe cases, non-compliance could lead to criminal investigation under Articles 53 and 54 of the OJK Law. ⁵

6. Transitional Provisions

   Previously issued written orders and implementing regulations remain valid unless they contradict with OJK Reg 31/2024. ⁶ Additionally, implementing regulations under the revoked OJK regulations on the written orders also remain effective unless inconsistent with OJK Reg 31/2024. ⁷

What Should You Do?

We recommend that LJK and related parties, including public companies, review their current governance and compliance procedures to ensure internal readiness to respond promptly to any written order.

1. Article 2 paragraph (2) of OJK Reg 31/2024 ↩
2. Article 2 paragraph (3) of OJK Reg 31/2024 ↩
3. Article 5 of OJK Reg 31/2024 ↩
4. Article 7 of OJK Reg 31/2024 ↩
5. Article 8 of OJK Reg 31/2024 ↩
6. The criminal sanctions are imprisonment of at least 4 (four) years and a maximum of 12 (twelve) years and a fine of at least Rp10 billion and a maximum of Rp300 billion for individuals, or a fine of at least Rp500 billion and a maximum of Rp1 trillion for corporations or business entities, whether in the form of legal entities or not, or other entities. ↩
7. Article 15 of OJK Reg 31/2024 ↩
8. Article 18 of OJK Reg 31/2024 ↩

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Disclaimer:
This client update is the property of ARMA Law and intended for providing general information and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. ARMA Law has no intention to provide a specific legal advice with regard to this client update.

Go to

1. Background
2. Key Provisions
3. What Should You Do?

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