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Nature of claims

Common causes of action

What are the most common causes of action brought against banks and other financial services providers by their customers?

In Brazil, the most common causes of action brought against banks and other financial institutions are claims grounded on alleged breach of consumer protection rules. Commercial banks and financial entities that grant loans for individuals and legal entities usually have a high number of lawsuits and consumer claims filed against them. There are several factors driving this phenomenon, among them is the high level of interest rates practised in Brazil. The claims usually challenge accrual of interest, alleged excessive rates, and lack of suitability over-indebtedness, etc.

Another major type of claim are lawsuits claiming the payment of moral damages filed by clients that complain about alleged improper listing of the name of the debtor in public lists of debtors. These claims are divided into lawsuits filed by bank clients against financial institutions, and counterclaims filed in connection with collection lawsuits and foreclosures filed by the banks against debtors. The claims are usually grounded in statutory consumer laws and alleged contractual breach derived therefrom.

Judicial disputes involving large commercial debtors are less frequent, but when a dispute arises it usually involves a challenge to the form of calculation of interest rate (eg, accrual of interest) and other alleged unfair, excessive or non-transparent practices in respect to calculation of interest, costs and fees.

Non-contractual duties

In claims for the misselling of financial products, what types of non-contractual duties have been recognised by the court? In particular is there scope to plead that duties owed by financial institutions to the relevant regulator in your jurisdiction are also owed directly by a financial institution to its customers?

The banking industry and the capital markets integrate the Brazilian financial system, which is strictly and extensively regulated. Brazilian statutory laws and regulations establish the types of financial institutions that are allowed to be licensed, and thae type of activities such financial institutions may undertake. The Brazilian Financial System consists of:

  • the National Monetary Council (CMN);
  • the Central Bank of Brazil (Central Bank);
  • the National Bank for Economic and Social Development;
  • the public and private financial institutions; and
  • payment institutions.

Insurance is also regulated but is not considered within the Brazilian financial system. Financial services is a broader concept that includes banking and finance activities as well as capital markets. More recently, payment services have been regulated and are carried by payment institutions, which may require a licence from Brazil’s Central Bank depending on their size, role or systemic importance. Banking activities and financial services are regulated by statutory and intra-statutory laws enacted by the Brazilian Congress and the CMN, respectively. The CMN is an ad hoc regulatory body that is composed of the Ministry of Finance, the Ministry of Planning and the President of the Central Bank, and its main role is to issue regulations and guidelines for public policy concerning credit and currency affairs (including monetary and foreign exchange policies). The Central Bank is responsible for the implementation and enforcement of the regulations and guidelines set forth by the CMN. The main goal of the Central Bank is to promote the stability and purchasing power of the Brazilian currency, as well as to strengthen the local monetary system and supervise the conduct of financial institutions. The Central Bank is responsible for implementing monetary policies, as well as exercising control over foreign investments and inflow and outflow of capital in Brazil, as provided by Law No. 4,595/1964 and several other specific rules enacted by the CMN. The Central Bank is also competent to grant licences to financial institutions, including securities brokers.

With respect to capital markets activities, the Brazilian Securities and Exchange Commission (CVM) is the regulatory agency in charge of the following:

  • the regulation of public offering of securities;
  • registering listed companies;
  • securities public trading;
  • custody of securities; and
  • supervision of publicly traded companies, among other things.

Pursuant to Law No. 4,595/1964, only a licensed financial institution may perform banking and finance activities such as the collection, intermediation and investment of its own or third parties’ funds (whether in national or foreign currency) as well as holding custody of third parties’ financial assets. Insurance is also a regulated activity that depends on the authorisation of the Brazilian Private Insurance Superintendence. However, insurance is not regarded as a financial activity under Brazilian law, but a specific area of activity with its own set of regulations.

Suitability is regulated by all of the authorities mentioned above, in respect to different products and, or markets. Specifically, in respect to the sale of securities, the CVM has regulated suitability in a more systematic manner. Specifically, the CVM issued Instruction 554/14, directed to the financial institutions that distribute and sell securities (such as shares, bonds, units of investment funds, collective investment agreements and other securities listed in the applicable legislation), imposing specific conflict and suitability rules. Breach of this regulation exposes the entity or the individuals, as the case may be, to sanctions imposed by law.

However, although there are several suitability rules in the laws and regulations, applicable specifically to Brazilian financial institutions, claims alleging misselling of financial products are usually grounded in the Brazilian Consumer Code. The Brazilian Consumer Code has certain general rules that facilitate these claims. Such rules encompass the obligation of the service provider to provide correct information regarding the features of the product, establishing that the consumer must be treated as the weak party of the contractual relationship and be treated accordingly.

Breach of suitability rules or misselling of financial products usually expose the sellers to regulatory sanctions and, although there have been some claims grounded on suitability, alleged breachs of consumer legislation are the most frequent grounds for claims.

Statutory liability regime

In claims for untrue or misleading statements or omissions in prospectuses, listing particulars and periodic financial disclosures, is there a statutory liability regime?

Brazil’s legal system is based on civil law and therefore most of the sources of law are statutory.

For untrue or misleading statements or omissions, in prospectuses listing particulars and periodic financial disclosures there is a statutory liability regime. The Brazilian Civil Code, which contains general rules for contracts, will be applicable, as will the Brazilian Consumer Code. Specific regulations from the CVM will also apply to prospectuses and other related financial material.

There is no specific need for the claimant to show reliance on the relevant document because it is assumed that customers rely on the prospectuses and related documents (unless otherwise agreed, and even in such a case if the client is a consumer, such a statement will likely be disregarded).

The most likely defendants will be the financial institutions responsible for the offer and, or sale of the financial product under discussion.

Jurisdiction normally follows the rules set forth in the Brazilian Code of Civil Procedure and, in general, the courts of the place the defendant is located will hear the case. It is possible to change this rule and choose a different venue in the prospectus. However, as the prospectus is an adhesion document (ie, the customer cannot negotiate its terms as they are in standard form) it would be possible for claimants to file lawsuits in other places and request the judge to disregard different choices of venue in the prospectuses. Moreover, if the claimant is a consumer, the Brazilian Consumer Code would allow him or her to file a lawsuit in the court of the city where he or she lives, so that any other choice of venue will probably be disregarded.

Duty of good faith

Is there an implied duty of good faith in contracts concluded between financial institutions and their customers? What is the effect of this duty on financial services litigation?

Yes. In Brazil, there is an implied duty of good faith in all contracts. In fact, the Brazilian Civil Code sets forth:

  • in article 113, that the contracts or transaction shall be interpreted according to good-faith and the practice of the place in which they were formed; and
  • in article 422, that the contracting parties shall observe the principles of probity and good faith, both in entering into the contract and in its performance.

Although article 422 does not mention the phases prior to the execution of the contract and after the performance is concluded, our scholars and court decisions understand that the parties shall observe good faith before the execution (ie, during the negotiations of the contract), at the performance of the contract and after the contract has already been concluded or terminated.

The characteristics of good faith obligations may vary according to the parties involved, the practices of the specific market etc, as per article 113 mentioned above.

The duty of good faith also determines that the parties should behave consistently, so that unexpected changes in their behaviour will be interpreted as a breach of the duty of good faith (similar to the common law concept of estoppel).

The good-faith duty in contracts set forth in Brazilian law has its origins in German law and is also similar to what is provided in the Principles of European Contract Law and in the International Institute for the Unification of Private Law Principles.

For financial institutions, the duty of good faith may also encompass, depending on the specific product, the fiduciary duty and the duty of care, meaning that the financial institution shall act in the best interest of its customers (especially in case of mutual investment funds, among other things).

In addition, for financial institutions and their customers, a large portion of the contracts may fall into the category of consumer contracts, because most of the time the customer purchases or uses the products or services as the final addressee or beneficiary (as per article 2 of the Consumer Code).

In such cases, the interpretation of the duties of good faith is even stricter because the consumer, considered to be vulnerable, is protected by certain concepts of the Brazilian Consumer Code. This provides greater obligations to the service provider in terms of disclosure of accurate and complete information.

On the other hand, when the customer is sophisticated or has great knowledge of the financial market, the judges tend to interpret their condition as a consumer with more flexibility and in a less strict manner.

The effects of the duty of good faith on financial services litigation are normally associated with:

  • complete and accurate information provided by the financial institution to the customer (mainly when they may be considered consumers); and
  • the duty of care (ie, to act diligently with the resources of the customer).

Typical claims alleging breach of good faith are generally associated with providing accurate and complete information to the customer (ie, whether the bank has fully disclosed the risk to the customers), such as in misselling cases, and lack of diligence of the bank in informing the customers that they could stop losses. In consumer cases, it is also common to see customers alleging that banks did not act in good faith when applying abusive interest rates, or regarding other issues related to loan contracts.

Fiduciary duties

In what circumstances will a financial institution owe fiduciary duties to its customers? What is the effect of such duties on financial services litigation?

The Brazilian legal system is a civil law system and, as such, concepts of fiduciary duties are different from similar concepts in common-law systems. In Brazil, fiduciary duties derive, simply, from the mandate given by one person to another, and shall be construed accordingly. The scope of the mandate establishes the boundaries and responsibilities of the person exercising the mandate. Generally, the fiduciary duty is stricter in mandates where the grantee has discretion to act in respect to a grantor within general instructions. Deviation from the exact terms or scope of a mandate may lead to a breach of fiduciary duties. Therefore, there are some remedies available for claims based on fiduciary duties when the mandate is not duly complied with. Within this context, a financial institution owes fiduciary duties to its customers whenever it receives a mandate to manage, discretionarily, the investments and transactions of the customer and fails to act in the customer’s best interest, without independence, in conflicting actions, etc.

Claims based on breach of fiduciary duties may expose the defendant to damages, which in all cases must be proven and quantified. Also, damages must be proven to have been caused directly by the action or omission of the defendant. Brazilian laws do not allow claims for punitive damages and jury trials do not apply to litigation other than certain criminal offences that are life-threatening.

Master agreements

How are standard form master agreements for particular financial transactions treated?

Standard form master agreements are usually accepted and enforced, to the extent that they have been validly entered into by parties with adequate capacity to contract. Their purpose is lawful and is determined to be achievable. In agreements used for mass products (such as bank accounts, consumer loans, etc), such standard forms are not negotiated by the parties; on the contrary, these agreements are viewed as ‘adhering agreements’. These ‘adhering agreements’ should be more favourable to the adhering party and the Brazilian Consumer Code is applied to overrule any conflicting clause or any clause that may be viewed as jeopardising the relationship causing prejudice to the customer.

In respect to standard form agreements, which are more complex and sophisticated, and have certain conditions subject to negotiation (such as International Swaps and Derivatives Association agreements), courts may construe these agreements in a more balanced manner and interpret the agreement from a more literal and objective standpoint. However, because of the risk that courts apply general principles of civil law, which may lead to equitable decisions that are detrimental to objective decisions based on the literal construction of the agreement, financial institutions and their clients rely on arbitration clauses. Therefore, most of the more complex standard form agreements include arbitration as means for dispute resolution.

In terms of jurisdiction of state courts, the parties are free to choose if they want to litigate in Brazil or abroad (except if the client can be considered a consumer). However, if the case is to be litigated in Brazilian courts, the parties will not be able to choose foreign law (unless certain very specific criteria are met, which we believe will not occur in financial agreements, particularly if the financial institution is a Brazilian entity).

Limiting liability

Can a financial institution limit or exclude its liability? What statutory protections exist to protect the interests of consumers and private parties?

There is no express rule in the Brazilian legal system on the limitation or exclusion of liability for contracts in general. Only the Consumer Protection Code explicitly sets forth the possibility of limitation of liability between supplier and a consumer that is a legal entity, when it is justifiable, prohibiting the disclaimer (article 51(I)). For suppliers contracting with individuals, the Consumer Protection Code does not authorise the limitation of liability. The exclusion of liability is not allowed in consumer contracts.

However, following the trend of foreign codes and statutes that allow the limitation or exclusion of liability, and also based on the free will of the parties (which is a principle embraced by our contractual system), Brazilian scholars and court precedents have been understanding that it is reasonable to accept such limitation or exclusion, especially if certain criteria are met. According to Brazilian scholars, the limitation of liability would be valid unless:

  • it is unilaterally imposed;
  • it conflicts with public policy;
  • it is created when the parties have an unequal position, as occurs in adhesion contracts (ie, in general forms of terms of conditions when the parties cannot negotiate);
  • it is stipulated to remove or transfer essential obligations of the contractor; or
  • its purpose is to disclaim malicious intent or grave misconduct of the party proposing it.

However, for a large number of financial institutions’ contracts, the customer will be considered a consumer and, in such a case, the provisions of the Consumer Protection Code will apply. In such cases, limitation of liability will only be allowed if the customer is an entity (and not an individual) and if the limitation or exclusion is justifiable (ie, the financial institutions expressly mention in the contract the reasons for limitation and the fact that the customer was informed and agreed). The Consumer Protection Code does not allow the complete exclusion of liability, but only the limitation. Even so, it is important to mention that courts may understand, for instance, that the justification is not concrete or reasonable and disregard the provision, if the consumer alleges so.

Also, for any provisions that restrict or limit consumer rights in any way, the Consumer Protection Code determines that such provision shall be highlighted, allowing for its immediate and correct interpretation by the consumer (paragraph 4, article 54).

Freedom to contact

What other restrictions apply to the freedom of financial institutions to contract?

The Brazilian contractual system recognises parties’ freedom to contract. However, the freedom to contract is limited to public order matters (eg, any clause contained in a prospectus or selling document that violates the Brazilian laws will not be enforceable). Moreover, if the Brazilian Consumer Code applies to the contract, the contract will be construed according to the strict principles of the Code, which protects clients, as they are considered the weak parties.

The English law concept of contractual estoppel is not common in Brazil. If a financial institution inserts such a disclaimer in a contract to preclude a client from claiming that he or she was being advised, and if the disclaimer is challenged in court, it is likely to be held valid if the client is a very sophisticated party. Otherwise, it may be possible for the client to challenge the disclaimer. In case of consumer contracts, such a disclaimer will not be valid.

Litigation remedies

What remedies are available in financial services litigation?

Customers that feel damaged by any action of the financial institutions may:

  • seek damages;
  • request the termination or rescission of the action;
  • request the specific performance of an obligation, or the performance of any obligation by the financial institution, if applicable; or
  • request injunctive reliefs (eg, to stop payments until a final decision on the merits of the case).

These are the most common remedies, but customers may also seek other remedies, if applicable, depending on the case.

Limitation defences

Have any particular issues arisen in financial services cases in your jurisdiction in relation to limitation defences?

No particular issues have arisen in connection with limitation defences. All the above comments are still applicable.

Procedure

Specialist courts

Do you have a specialist court or other arrangements for the hearing of financial services disputes in your jurisdiction? Are there specialist judges for financial cases?

No. Brazil does not have specialist courts or other arrangements for the hearing of financial services disputes. The regular state courts entertain jurisdiction to hear financial cases. Depending on the city where the case will be held, there are some special state courts for corporate issues in general that will hear financial cases, particularly when they do not involve consumer contracts (in such cases, the regular court will hear the case).

There are no specific requirements for a case against a financial institution to be heard in court. The general requirements for civil procedure apply for such cases (meaning payment of court costs, correctly presenting the case, etc).

All Brazilian judges start their career in public examinations. There are special requirements for judges in the Superior Court of Justice (the final court to decide on federal laws) and in the Supreme Court (the final court to decide on constitutional law), who are appointed by the Brazilian president after certain other specific approvals.

Procedural rules

Do any specific procedural rules apply to financial services litigation?

No. Financial services litigation follows the same rules as other proceedings.

Arbitration

May parties agree to submit financial services disputes to arbitration?

Yes. Parties are free to submit financial services disputes to arbitration. However, when the customer is considered a consumer, this specific arrangement may be disregarded in court if the customer alleges that he or she was forced to agree to it, that the arbitration is too burdensome for the customer, etc. Therefore, it is not usual for financial companies to consider arbitration in contracts involving consumers because the Consumer Protection Code has specific protective principles that may affect the ability of the parties to choose arbitration.

Arbitration is particularly strong in Brazil and courts respect arbitral awards.

Out of court settlements

Must parties initially seek to settle out of court or refer financial services disputes for alternative dispute resolution?

Yes. Parties are free to settle out of court or to refer financial services disputes for alternative dispute resolution (such as mediation or arbitration). Since March 2016, Brazil has a new Code of Civil Procedure that encourages parties to settle and also determines a conciliatory hearing at the very beginning of the proceedings in an attempt to foster settlement at an early stage, avoiding litigation.

Pre-action considerations

Are there any pre-action considerations specific to financial services litigation that the parties should take into account in your jurisdiction?

No. There are no pre-action considerations specific to financial services litigation. However, as in any civil lawsuit in Brazil, it is important for the claimant to show that there is a dispute around the matter, otherwise courts may understand that the claimant has no interest in litigating (therefore, prior notifications, proof of the dispute between the parties etc, are advisable).

Unilateral jurisdiction clauses

Does your jurisdiction recognise unilateral jurisdiction clauses?

Based on changes to the Code of Civil Procedure that became effective in March 2016, the parties are now free to choose foreign venues (this was discussed in the past, and sometimes Brazilian courts agreed to hear cases even when the parties chose foreign courts). In view of that, in theory, such unilateral jurisdiction clauses could be accepted. However, if the potentially damaged party (with such a clause) decides to dispute the clause and the fact that it may not be considered balanced, Brazilian courts may decide that this lack of balance between the parties is not acceptable and may disregard the clause, deciding to hear the case in Brazil.

Disclosure

Disclosure obligations

What are the general disclosure obligations for litigants in your jurisdiction? Are banking secrecy, blocking statute or similar regimes applied in your jurisdiction? How does this affect financial services litigation?

In Brazil, as a general rule, the burden of proof rests on the claimant’s shoulders, but if the claimant can present minimum evidence of his or her rights, the defendant should also prove its allegations in order to counter the argument. Therefore, the party that alleges a right or fact has the burden of proving it, unless the dispute involves consumers, as they may request a shift in the burden of proof. For instance, if the claimant is considered a consumer, the claimant may seek the financial institutions present documents that the consumer does not have access to.

Banking secrecy is respected, but this does not prevent financial institutions from being ordered to present information if necessary. This is because information that is secret or confidential (such as banking, business and industry secrets) is protected and if it must be presented in court the lawsuit will be sealed so that only the parties involved will have access to that information and the confidentiality or secrecy will not be spoiled. The party cannot simply allege that it will not present the information because it is confidential or secret. If that piece of information is really necessary for the comprehension or understanding of the case and the party holds the information, the party will need to present it (and may request the case to be sealed to guarantee confidentiality), otherwise the case may go against that specific party because the right was not properly evidenced.

The same applies to witness evidence. If the witness testifies regarding confidential information, the case will be sealed and no third parties will have access to it. Only in the case of certain specific professionals (eg, doctors) will the testimony be dismissed just because the information is confidential.

The discovery concept (as it is defined in common law, with fishing expeditions, etc) does not apply in Brazilian law. Each party is required to produce evidence in its favour, but the party cannot simply take information that the other party does not want to voluntarily disclose.

However, if the judge understands that a party could have presented a document or piece of information that was important to the interpretation of the facts, but that did not occur, the judge is allowed to hold adverse inference because of the failure of that party to provide that piece of evidence.

The Brazilian jurisdiction will not specifically observe secrecy codes of other jurisdictions, mainly because of national sovereignty. However, Brazilian law does not have the same concept of discovery and fishing expeditions.

Protecting confidentiality

Must financial institutions disclose confidential client documents during court proceedings? What procedural devices can be used to protect such documents?

As mentioned in question 16, each party shall produce evidence of its allegations (and in litigation involving consumers, the financial institution may also be ordered to present documents that the consumer does not have access to). If confidential client documents are necessary for the interpretation of the case, then the financial institution will need to disclose them (otherwise the court will be permitted to hold adverse inference following the failure to provide information or documentation). If confidential documents or information are presented in court, any of the parties may request the court have the case under secrecy or seal so that third parties will not have access to confidential information.

Disclosure of personal data

May private parties request disclosure of personal data held by financial services institutions?

Generally, private parties may only seek that financial services institutions disclose the personal data of the parties involved in that specific litigation. They cannot request financial services institutions to disclose information of third parties that are not involved in the lawsuit.

Data protection

What data governance issues are of particular importance to financial disputes in your jurisdiction? What case management techniques have evolved to deal with data issues?

The concept of discovery, known in common law, is not applicable under the Brazilian system, so there are no fishing expeditions and the party may only present the documents or information it understands to be necessary (subject to facing adverse inferences from court). For litigation involving consumers, the financial institution shall be ordered to present documents that the client does not have access to. Based on that, financial institutions usually keep electronic copies of the documents that may be needed in a lawsuit, observing at least the statute of limitations period.

In the case of more sophisticated services, it is also advisable to keep all the communications exchanged by the parties (minutes of meetings and other documents, if applicable), especially if this is evidence that the transaction was sophisticated and the client knew exactly what was being agreed to.

Interaction with regulatory regime

Authority powers

What powers do regulatory authorities have to bring court proceedings in your jurisdiction? In particular, what remedies may they seek?

Regulatory authorities are not entitled to bring claims on behalf of customers of financial institutions in Brazil. In Brazil, the general rule is that no one may claim a right pertaining to another person, with a few exceptions. The exceptions are class actions and other collective claims that can be filed by certain class entities, the District Attorney and other persons ‘in substitution’ (or on behalf of) the customers or the damaged parties. Regulatory authorities (such as the CVM) may act as assistant to the plaintiffs or defendants, in the role of ‘amicus curiae’ (ie, the person that is assisting with the application of the law).

Disclosure restrictions on communications

Are communications between financial institutions and regulators and other regulatory materials subject to any disclosure restrictions or claims of privilege?

Communications between financial institutions and regulators are covered by banking secrecy laws. The data exchanged between them may not be disclosed to third parties and are not publicly available.

Private claims

May private parties bring court proceedings against financial institutions directly for breaches of regulations?

No. Private parties may not act on behalf of regulators and are not entitled to any claims in case of breach of regulations by a financial institution. They are only entitled to claims if and when such breach of regulations caused them direct damages, which must be proven and quantified.

In a claim by a private party against a financial institution, must the institution disclose complaints made against it by other private parties?

Generally speaking, in a claim by a private party against a financial institution it will not be necessary for the institution to disclose complaints made against it by other private parties. However, depending on the particularities of the case and the reasons for the private party to request it, the judge may consider such information relevant for the case and order the financial institution to present any other specific complaints. However, it is important to understand that this would be a real exception and not a rule for every case.

Enforcement

Where a financial institution has agreed with a regulator to conduct a business review or redress exercise, may private parties directly enforce the terms of that review or exercise?

No. Private parties may not supervise, interfere or enforce the terms of the review or exercise.

Changes to the landscape

Have changes to the regulatory landscape following the financial crisis impacted financial services litigation?

No. The Brazilian financial system has already been regulated in the areas that proved more problematic during the financial crisis of 2008 (eg, real estate finance and derivatives).

Complaints procedure

Is there an independent complaints procedure that customers can use to complain about financial services firms without bringing court claims?

Customers can complain in the state and municipal consumer protection agencies (PROCONs) just as other consumers that want to complain about consumer services. In theory, not only individuals, but companies can also complain to the consumer protection agencies; however, they must meet the requirements of being considered consumer under Brazilian law to be entitled to complain to such agencies. Normally, such requirements involve the fact that the services are being used by the customer as final addressee (so that the customer is not using it as part of its production activities or process) and the vulnerability of the customer. Current trends in Brazilian courts demonstrate that large companies may be considered as consumers if they present, for instance, any sort of technical, legal, informational or economic vulnerability.

Claims filed before consumer protection agencies do not oblige the financial institutions to really solve the problem. If a claim filed before such an agency is not resolved, customers will still have to file a lawsuit in court.

Consumer protection agencies may impose administrative penalties against the service providers in specific cases such as:

  • a fine;
  • a warning;
  • product seizure;
  • destruction of the product;
  • cancellation of product registration with the competent authorities;
  • prohibition to manufacture the product;
  • suspension of product or service supply;
  • temporary suspension of the activity;
  • revocation of concession or permission to use;
  • cancellation of licence for the establishment or activity;
  • total or partial closing down of the establishment, work or activity;
  • administrative intervention; and
  • imposition of counter-advertising.

In any case, complaints filed by consumers before the consumer protection agencies are optional and not mandatory. If the customer prefers, a court action can be brought directly. The consumer protection agency complaint does not impact the subsequent court action.

It is worth noting that some complaint websites are also becoming more popular in Brazil, such as consumidor.gov.br and www.reclameaqui.com.br. On such platforms, customers make claims and the service provider or supplier of products will be exposed to the claim until it is solved (or for such a time, according to the practices of each website). Owing to the negative publicity resulting from such media exposure, companies try to rectify the problems addressed in these platforms, depending on the case.

Such proceedings are, however, optional and are not a prior requirement for a subsequent lawsuit. A lawsuit can be filed by the customer at any time.*

Recovery of assets

Is there an extrajudicial process for private individuals to recover lost assets from insolvent financial services firms? What is the limit of compensation that can be awarded without bringing court claims?

No. There is no extrajudicial process, court claims are mandatory.

* This question was answered with the assistance of Alexandre Jabra, associate from our consumer practice group.

alexandre.jabra@trenchrossi.com.

Updates & Trends

UPDATE & TRENDS

Updates & Trends

Updates and trends

Brazil is slowly recovering from one of the worst economic crises’ in its history. Financial institutions may still be facing difficulties with collections, which may increase the need for court cases to collect default amounts from customers. Financial distress may encourage borrowers to file lawsuits to challenge interest rates and other contractual issues (abusive clauses, etc) in an attempt not to pay their debts in full. In this regard, litigation against financial institutions may increase for the next year or at least until the current financial crisis has changed.