In each government institution, of course, there is one independent institution that is tasked with supervising institutions under the auspices of one independent institution such as banks, insurance, investment institutions, and others. Plus, if later there are things that are not good or risky. Of course, this independent institution will investigate the problem. Similarly in the field of state finance, there is a Financial Services Authority that will ensure that financial institutions run smoothly. The Financial Services Authority is an institution that will regulate, supervise, and even investigate financial institutions. For more details about the Financial Services Authority or OJK, you can read the article below.

What is the Financial Services Authority?

The Financial Services Authority is an institution that regulates, inspects, and investigates financial institutions. OJK will ensure that the institution runs in accordance with applicable laws and regulations so that the community can be protected when dealing with these institutions. As an independent institution, OJK is free from interference from other parties. OJK was established under Law Number 21 of 2011 with the function of organizing an integrated regulatory and supervisory system for the entire financial services sector. With the establishment of the Financial Services Authority, the OJK replaces the role of Bapepam-LK in regulating and supervising the capital market and financial institutions, as well as replacing the role of Bank Indonesia in regulating and supervising banks, as well as protecting financial services consumers.

Functions and Objectives of OJK

This OJK institution certainly has a function from its establishment. This important role will later be very useful for the financial and economic sectors in Indonesia. The functions of the OJK itself are:
  1. The first function of the Financial Services Authority is to organize a system of regulation and supervision on all activities in the financial services sector. This includes the capital sector, money market, and also the non-bank financial industry sector or IKNB.
  2. The second is that the Financial Services Authority has a function to make decisions in terms of financial development and progress in Indonesia. This decision-making should come from the various sectors of banking, capital markets, fintech, and other non-bank industries involved in it.
  3. Then there is a function to protect consumers. This is one of the functions of the Financial Services Authority in order to realize inclusive finance for the Indonesian people with trusted consumer protection. Therefore, later the OJK will regulate regulations related to public data protection for related parties.
As for the objectives of the Financial Services Authority, they are:
  1. Maintaining that all activities in the financial services sector are carried out in an orderly, fair, transparent, and accountable manner.
  2. Able to realize a financial system that grows sustainably and stably.
  3. Able to protect the interests of consumers and the community.

Duties of the Financial Services Authority

The Financial Services Authority has the main task, namely to carry out regulation and supervision of financial services activities in the banking sector, capital markets, and non-bank financial institutions such as IKNB. In addition, there are also duties such as, regulating and supervising financial services activities in the banking sector, regulating and supervising financial services activities in the capital market sector, regulating and supervising financial services activities in other sectors such as pension funds, investment products, insurance and other financial institutions. There are duties of the Financial Services Authority in the banking sector such as developing a bank supervision system and also enforcing the law in the banking sector. OJK must also conduct coaching, inspection, and supervision in the banking sector. All of these things can later be developed again by maximizing banking performance for the benefit of the wider community. Meanwhile, in the IKNB sector or various non-bank financial industries, the OJK's task is to implement all IKNB policies in accordance with the current regulations. This institution must also evaluate, formulate norms and procedures in the IKNB sector. In addition, there are also regulations in the field of IKNB that must be carried out by the Financial Services Authority institution. For the capital market sector, OJK has duties in the capital sector, including by carrying out all management in the capital market crisis. In addition, the OJK institution must also formulate all principles contained in management and transactions and conduct various analyses of capital market supervision and development. That way, this capital market can later run in accordance with existing provisions. 

The Role of the Financial Services Authority

There is a role of the Financial Services Authority itself in the government and also the community, namely:
  1. Granting permission to establish a bank. The role of OJK in every activity in the banking sector is regulated through the Financial Services Authority Law Article 7. Where, the role of the OJK is to determine every regulation and carry out supervision which includes several things.
  2. The role of OJK as a licensee to establish a business or bank business such as opening a branch office is from the authority stipulated through the law. Previously, this authority was part of the authority of Bank Indonesia. The role of OJK in regulating bank business activities is also through the provision of approval for banks to carry out their business activities. In addition to granting permits for the establishment of the bank, the OJK also has the authority to revoke business licenses and bank business activities. This is done because the bank has violated the laws and regulations that have been made. Where, the provisions of the authority that exists in the OJK are related to its duties in regulating every bank activity based on the Financial Services Authority Law Article 8.
  3. Strengthening resilience for financial services. Through the Financial Services Authority Law that has been established since 2011, the role of the OJK is to fully supervise every financial services sector, including bank business activities. This is done as a form of protection for the resilience of financial services. In which, each bank will be formed a financial supervision system in a clear and transparent manner. This is also intended so that banks can synergize with each other and work together in closing weaknesses or shortcomings in each financial sector.
  4. Fixing existing shortcomings. The role of OJK is also as a party that provides education to the general public about the banking world. So far, interest in financial services may be a problem and a shortcoming that must be fixed because people do not really believe or even fear things related to banking. With the presence of OJK as a supervisory institution, OJK has become a medium to socialize knowledge about the banking world to the wider community. That way, the role of the OJK can be a remedy for the shortcomings in the financial services sector. In fact, OJK has a very important role in this financial service.
  5. In addition, OJK also has a role in regulating and supervising capital market activities with the assistance of the Indonesia Stock Exchange (IDX) as a facility provider.

Authority of the Financial Services Authority

There is also authority that will later be related to the duties of the OJK itself that they have to fulfill these tasks. These authorities are:
  1. Granting permits for all activities that occur in a bank such as the establishment of a bank, the opening of bank offices, to the revocation of bank business licenses.
  2. Regulating bank activities related to sources of funds, funding, hybrid products, and activities in the service sector.
  3. Regulate and supervise bank governance to bank audits.
  4. Making and establishing regulations on the supervision of the financial services sector.
  5. Creating and establishing organizational structures and infrastructure to managing and regulating wealth and needs.
  6. Make operational policies to supervise financial services activities in the non-banking sector.
  7. Supervise the implementation of the supervisory duties of the Exclusive Head of the financial institution.
Reporting from the official website of the Financial Services Authority, the authority is:
  1. Stipulating the regulations for the implementation of Law of the Republic of Indonesia Number 21 of 2011 concerning the Financial Services Authority.
  2. Establish laws and regulations in the financial services sector.
  3. Establish regulations on supervision in the financial services sector.
  4. Establish regulations on procedures for determining written orders against financial service institutions and certain parties.
  5. Establish regulations on procedures for determining statute managers in financial services institutions.
  6. Establish regulations on procedures for imposing sanctions in accordance with the provisions of laws and regulations in the financial services sector.
There is also the authority of the Financial Services Authority in supervising non-bank banking institutions. These authorities are:
  1. Establish operational policies for supervision of financial services activities.
  2. Supervising the implementation of supervisory duties carried out by the Head of Exclusivity.
  3. Giving written orders to financial services institutions and certain parties.
  4. Appoint a statute manager.
  5. Specifies the use of statute managers.
  6. Establish administrative sanctions against parties who violate laws and regulations in the financial services sector.
  7. Granting and revoking business licenses.

Basis for the Establishment of OJK

There are also principles that were formed when creating the OJK institution. These principles are the first to exist the principle of Independence. Basically, this principle of independence will show that every decision taken by the Financial Services Authority (OJK) will be independent. This means that all decisions taken are not accompanied by interference and intervention from other parties. However, the decision taken is of course still based on ongoing laws and regulations without harming any party. Furthermore, there is the principle of public interest. As one of the state institutions, the financial services authority will work for the benefit of many people. In this case, the OJK institution will organize and act in accordance with the initial objectives to protect the interests of the general public. In addition, this institution can also take action to defend consumers and the community. Not only that, this institution also functions to promote public welfare. There is also a basis for openness. If you explore further, then you will find the fact that the OJK institution has an open nature. The OJK will be open to various rights of the community and will not distinguish the interests of one community from another. In addition, this institution will also not cover a single thing to the community. However, this institution must also continue to protect every human rights of individuals, classes, and state secrets. Then there is the principle of professionalism, which means that the OJK institution always prioritizes its expertise in carrying out all its duties and authorities as one of the state institutions. However, all actions must always be based on various codes of ethics and provisions that have been regulated in the legal system. Furthermore, for the principle of integrity, this Financial Services Authority institution always adheres to all existing moral values in carrying out all its duties. Including in terms of wise decision-making, and other things. For this reason, OJK can be said to be one of the state institutions that has high integrity. And finally, the principle of accountability, namely all activities and results carried out by the OJK, must still be accounted for before the applicable law. This accountability must be carried out and shown to the public so that this financial institution can be called one of the transparent institutions.

OJK Strategic Policies

In 2020, OJK has prepared policies and initiatives to be directed. Some of these policies will be carried out to support financing in various government priority sectors in increasing economic growth, empowering SMEs and MSMEs as well as small communities, increasing information technology innovation in the financial services industry, as well as internal reforms in terms of regulating and supervising the entire financial services sector. The policies carried out by the Financial Services Authority are as follows:
  1. Make improvements to the economies of scale of the financial industry.
  2. Narrowing the regulatory and supervisory gap between the financial services sector.
  3. Carry out digital transformation in the financial services sector.
  4. Accelerating the provision of financial access and strengthening the implementation of market conduct and consumer protection.
  5. Developing the Islamic economic and financial ecosystem.
For those of you who want to make investments, trades, or online loans, you are expected to check whether the company has an official license to circulate by the OJK itself. Because of this official license, the company you choose is a company that has been supervised so that it is safe in its financial arrangements. To see how the company has been registered with the OJK or not, you can check it through the official website of the Financial Services Authority. This the discussion from GICTrade regarding the explanation "What is the Financial Services Authority? Everything about OJK!". You can also find out other information about crypto, investment, and other finance, such as "Non Fungible Token, New Trend of Digital Asset Transactions" only on the GIC Journal. Also make sure you deepen your forex knowledge at GICTrade, via the scalping ebook, and also NFP live trading.