Account closures: what STJ Topic 1,119 means for banks and payment institutions

The Second Section of the Superior Court of Justice (STJ) has ruled on Repetitive Appeals Topic 1,119 (Tema Repetitivo 1.119), settling an issue of significance for banking litigation. 

The binding thesis provides that “the prohibition set forth in article 39, item IX, of the CDC [Consumer Protection Code] does not apply to the unilateral termination of a bank checking account agreement at the initiative of the financial institution” (free translation).

As a thesis established in a repetitive special appeal, it must be followed by judges and courts (art. 927, III, of the Code of Civil Procedure).

The decision addresses an argument frequently raised in lawsuits concerning the termination of banking relationships: that the application of the Consumer Protection Code would require the institution to keep the account open for as long as the consumer wished to continue using and paying for the service. The STJ rejected that reading.

In the Court’s view, a checking account is a continuing performance contract, based in part on trust between the parties and subject to its own regulatory framework. Moreover, terminating an existing contractual relationship is not the same as refusing to provide a service, which is the conduct article 39, IX, of the Consumer Protection Code seeks to prevent.

In principle, therefore, a bank may unilaterally close an account. This does not mean that the manner of closure has become irrelevant: the judgment underscores the need for prior notice to the account holder and for compliance with the applicable contractual and regulatory obligations.

This is one of the main practical effects of Topic 1,119. The debate no longer revolves around an alleged general obligation to keep the account open and instead focuses on how the termination was carried out in each specific case.

Notice to the customer, compliance with contractual rules, disposal of the remaining balance, internal records and documentation of the procedure become central to the defense. 

It will not be enough to show that the institution had the right to end the relationship; it will be necessary to prove that this right was exercised properly.

Here, the analysis calls for greater care. The thesis was established for bank checking account agreements and for terminations carried out by financial institutions. It would therefore be inappropriate to extend it automatically to payment accounts, digital wallets and other products offered by payment institutions.

This does not diminish the precedent’s importance for that market. The ratio decidendi of the judgment may support arguments by analogy in similar disputes, particularly regarding the continuing nature of the relationship, the existence of a specific regulatory framework and the distinction between refusing to contract and terminating a pre-existing relationship.

Such an analogy, however, must be built on the legal nature of the account and on the specific regulation of the activity. Similar features from the user’s perspective do not make checking accounts and payment accounts legally identical categories.

For payment institutions, the precedent also warrants close monitoring, especially in lawsuits that seek to turn consumer protection into an obligation to maintain the relationship indefinitely.

Our team closely monitors developments relating to STJ Precedent Topic No. 1,119 and is available to clarify any questions and assist financial institutions and payment institutions in assessing the impact of the precedent on account closure procedures, contracts, customer communications, internal governance and litigation strategies.