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19 April 2002
The applicability of the Brazilian Consumer Defence Code to the national financial sector is proving to be contentious following the filing of a lawsuit by several banks and the issuance of a resolution that establishes the regulatory provisions applicable to transactions and services rendered between financial institutions and their clients.
The code establishes general principles for relations between suppliers and/or service providers and consumers, and covers banking, financing, credit and insurance services (Section 3(2)). The code has been widely accepted as being applicable to banking services following the Superior Court of Justice's ruling that the provision of services by financial institutions to their customers constitutes a consumer relationship.
Then, in December 2001, several banks represented by the National Confederation of the Financial System filed a lawsuit before the Supreme Court, claiming that the application of those provisions of the code concerning banking, financial, credit and insurance services conflicts with Section 192 of the Brazilian Federal Constitution, according to which the financial sector must be governed by supplementary laws rather than statutory laws such as the code.
The confederation claims that since Section 192 of the Constitution also refers to defence measures for consumers of services provided by financial institutions and, on that basis, demands that the following should no longer comprise a 'consumer relationship' under the code, and nor should the code's provisions apply to them:
The court has yet to issue its decision.
Earlier, on July 26 2001, the Central Bank issued Resolution 2,878 establishing
the regulatory provisions applicable to services provided by financial institutions to their customers.
Although the regulation was initially welcomed by financial institutions and consumer protection agencies, it also attracted criticism for offering no protection to consumers in addition to that provided by the code. No relevant issues were raised with respect to its contents since the resolution did not overhaul any existing legislation. Also, the resolution's enforceability against financial institutions was not challenged because of the Central Bank's authority.
After the resolution was issued, the Superior Court of Justice stated that the code will prevail in cases of conflict between it and Central Bank regulations. However, if the Supreme Court finds that the applicability of the code's provisions is unconstitutional, the resolution will prevail and the Central Bank will have exclusive authority to monitor and apply sanctions to financial institutions with respect to consumer queries.
For further information on this topic please contact Nei Zelmanovits or Aline Liao at Machado, Meyer, Sendacz e Opice by telephone (+55 11 3150 7120) or by fax (+55 11 3150 7071) or by email (firstname.lastname@example.org or email@example.com).
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