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Bank XYZ started to implement a new clause in late 2019 in a…
Bank XYZ started to implement a new clause in late 2019 in a business loan agreement that requires customers to pay up to three times of debtors’ monthly installments on top of 5% fine if they want to repay the remaining outstanding loans before maturity.
Not only did the new clause was enforced to new loan agreements from the date of implementation onwards, but it also applied to past loan agreements.
The reason behind the implementation of the new clause, according to the line of business, was to prevent customers from leaving the bank for competitors amid tight competition. Often times, salespersons who worked at competitors used to work at Bank XYZ and were trying to take over their old customers from Bank XYZ.
The new clause was meant to address that issue and retain customers.
Many customers who had signed loan agreements before the date of the implementation filed complaints with the bank, arguing that they had never consented to the new clause in a loan agreement they signed with Bank XYZ.
They filed their complaints through Bank XYZ’s contact center, OJK, social media channels, and mass media platforms.
The number of complaints continued to increase, following the implementation of the new clause.
The furor of customers’ complaints peaked in 2021, when a number of said customers protested in front of the bank’s branch in Manado, North Sulawesi, and the protest made headlines in a number of local media outlets.
A local non-governmental organization that claimed to be advocating dozens of Bank XYZ customers said it had collected customers’ signatures for the protest.
The Financial Services Authority summoned the bank’s officials for a hearing session over the protest, while Corporate Communications held a limited press briefing with several Manado-based journalists in efforts to mitigate the reputational damage.
An internal meeting was set up, involving Legal, Corporate Communications, and Compliance, Risk Management, as well as the business team.
Corporate Communications suggested the business team communicate the new clause directly to each customer through either letter or SMS and told the business team to make sure each customer received it. Meanwhile, Legal and Compliance said flyers at branches and ATM screens were sufficient to meet legal requirements set by the OJK on consumer protection. Legal division also said it proved to have won a legal battle against a customer by doing such a way of communicating the new clause to customers.
The “costly” direct communication means suggested by Corporate Communications made the business team decide to go with Legal’s advice.
The OJK also told the business team to remove a clause in the loan agreement that could serve as a “blanket agreement” to cater to future changes.
Customers, however, remained filing complaints for the same reasonthe unconsented clause. In addition, customers also complained that they were put in uncertain schedules when they wanted to repay their outstanding debt.
In March, another case made it to the court and a local news outlet. A customer in Central Java sued Bank XYZ over the new clause that he said he had never agreed to.
Do Situation Appraisal (SA) to identify the concerns (problems, decisions or future events), prioritize them and plan for their resolutions (which process is needed? PA, DA or PPA). A minimum of 5 concerns shall be identified.
