From commodities to financial instruments: Consumer protection challenges in gold financing in Indonesia under OJK Regulation no. 17 of 2024

Abstract

Background: The enactment of OJK Regulation No. 17/2024 marks a milestone in diversifying Indonesia's financial ecosystem by establishing an operational bullion banking framework. However, its "gold-to-gold" financing mechanism introduces severe systemic vulnerabilities, including global gold commodity price volatility, extreme information asymmetry, and deep contractual imbalances between financial services institutions and retail consumers. Methods: This study utilizes a rigorous doctrinal methodology, employing statutory, conceptual, and comparative approaches to assess the current regulatory framework's adequacy, with particular reference to Turkey's macroprudential integration and the London Bullion Market Association (LBMA) standards. Findings: The study reveals a critical legal vacuum within POJK 17/2024: while the regulation mandates institutional risk governance, it fails to provide explicit risk-sharing or consumer protection instruments from the borrower's perspective. Consequently, market risks are entirely transferred to consumers through standard adhesion contracts. Conclusion: The current gold-to-gold financing mechanism leaves retail borrowers structurally exposed to global commodity price shocks, creating a governance gap between institutional risk management and consumer protection that requires urgent regulatory correction. Novelty/Originality of this article: By evaluating Turkey's macroprudential integration and the LBMA standards, this study provides concrete de lege ferenda legal recommendations, such as mandatory asymmetric hedging buffers, standardized volatility disclosure forms, and equitable risk-sharing clauses, to foster distributive justice and financial system stability.