Due to the vast development of globalization, financial services industry has grown into a more complex system. According to Onno Ruding, Vice-Chairman of Citibank, in his paper for the Bank of International Settlements, since 1990s financial services industry has experienced enourmous changes. He said that the impact of information technology, deregulation and liberalisation has changed and reshaped the financial landscape.
There are several trends in financial services industry that made it more complex, such as cross-category and cross-border consolidation, for example consolidation between bank and insurance company; and the financial crises in America, Europe, and other regions that resulted in the need of effective financial safety nets. Onno Ruding also said that these problems require national supervisory and regulatory institution, which will have a decisive influence on developments in the structure of the financial services sector.
Indonesia, as part of the international community, cannot avoid the trends that said by Onno Ruding. The cross-category and cross-border consolidation are happened in Indonesia. Therefore, the existence of a single institution that will supervise and regulate the financial services industry is a must.
Prior to OJK Bill, financial services industry in Indonesia is being regulated and controlled by two separate institutions. The first one is Bank Indonesia, which conducts a regulatory and supervisory action towards banks in Indonesia. Pursuant to Article 8 of Law No. 23 of 1999 on Bank Indonesia as amended with Law No. 3 of 2004, Bank Indonesia is mandated to determine and implement monetary policies; to control and secure payment system; to regulate and supervise banks.
The second one is Ministry of Finance, particularly the Capital Market and Financial Institution Supervisory Agency (Bapepam-LK). Pursuant to Article 3 of Minister of Finance Regulation No. 606/KMK.01/2005 on Organizational Structure and Work Procedures of the Capital Market and Financial Institutions Supervisory Agency, Bapepam-LK is mandated to regulate and supervise the capital market activities, along with to draft and implement policies and technical standardization regarding financial institutions. In essence, other financial services, except banks, are fall under the supervision of Bapepam-LK.
The development of financial services industry, that includes cross-border and cross-category consolidation, including the change of volume and size of financial industry, the existence of OJK as a regulatory and superisory body is a must.
OJK as a singe institution that will supervise the financial services industry could also prevent the occurrence economy crises that are tend to happen during the recent years, as we can see in United States of America and European area.
Similar to Onno Ruding opinion, there is a growing need for cross-sectoral financial supervision, as well as cross-border financial supervision. Every effort should be made to avoid lacunae in supervision (“nobody cares”) as well as overlapping and duplication in supervision (“everybody cares”).