Financial Services Regulatory Framework in Portugal

Regulatory Bodies

The Bank of Portugal (Banco de Portugal) and the CMVM (Comissão do Mercado de Valores Mobiliários) are responsible for regulating and supervising the financial sector in Portugal.

Key Responsibilities

• Regulate and supervise financial institutions
• Ensure compliance with regulatory provisions
• Investigate and take action against breaches of regulation

Directors’ Liability

Directors may be held liable for civil or criminal offenses if they breach regulatory provisions, cause damages to shareholders or third parties, or engage in fraudulent activities.

Consequences of Breach

• Civil liability: directors may be held financially responsible for damages caused
• Criminal liability: directors may face imprisonment and/or fines for breaches
• Reputation damage: breach of regulation can harm the reputation of the company and its directors

Private Rights of Action

Private rights of action do not apply to violations of national financial services authority rules and regulations.

Limitations on Private Action

• No private lawsuits against regulatory bodies or their officials
• Regulatory bodies have exclusive jurisdiction over enforcement matters

Standard of Care for Customers

The standard of care applicable to financial entities and authorized persons when dealing with non-professional clients is the highest level of diligence, aiming to protect their interests.

Key Principles

• Financial entities must act in the best interests of customers
• Authorized persons must exercise utmost care and diligence when advising customers
• Customers must be fully informed and understood before making investment decisions

Cross-Border Issues

Financial institutions from other EU member states can provide services in Portugal under the freedom to provide services or by establishing a branch or representative office.

Supervision and Regulation

• The Bank of Portugal may supervise compliance with certain Portuguese legal provisions
• Foreign entities providing banking services in Portugal must inform the public about their governing rules

International Standards

International standards play an important role in shaping the regulatory framework, but they do not have binding force and can be deviated from by the regulatory authorities if necessary.

Key Considerations

• International standards are influential but not legally binding
• Regulatory authorities may choose to adopt or depart from international standards as needed