Circular Letter CVM/SMI/SOI 01/2020

03/12/2020 SEI/CVM - 1151930 - Circular Letter https://sei.cvm.gov.br/sei/controlador.php?acao=documento_imprimir_web&acao_origem=arvore_visualizar&id_documento=1213677&infra_sistema=… 1/4 SECURITIES AND EXCHANGE COMMISSION OF BRAZIL (CVM) Rua Sete de Setembro, 111/2-5th and 23-34th Floors, Centro, Rio de Janeiro/RJ – CEP: 20050-901 – Brazil - Tel.: (21) 3554-8686 Rua Cincinato Braga, 340/2nd, 3rd and 4th Floors, Bela Vista, São Paulo/ SP – CEP: 01333-010 – Brazil - Tel.: (11) 2146-2000 SCN Q.02 – Bl. A – Ed. Corporate Financial Center, S.404/4th Floor, Brasília/DF – CEP: 70712-900 – Brazil - Tel.: (61) 3327-2030/2031 www.cvm.gov.br Circular Letter No. 1/2020-CVM/SMI-SOI Rio de Janeiro, December 3, 2020.

To
Directors responsible for CVM Instruction No. 505/11 and CVM Instruction No. 529/12 at intermediaries.

Subject: Treatment of problems and cases of controversy between the intermediary and its clients.

Dear Directors,

1. This Circular Letter aims to provide guidance to intermediaries regarding the handling of their clients' complaints, based on the experience of the CVM's citizen orientation services and intermediary supervision.
   I – INTRODUCTION
2. With the growth in the number of retail investors, particularly since the beginning of the current international health crisis, many Brazilians are making their first investments in the capital market at this time. Projections for the coming years indicate that this participation should continue to increase, a promising scenario from the point of view of financial inclusion, but which brings challenges to ensure that the experience of this new participant in the market is adequate and satisfactory.
3. In this context, it is to be expected that one of the main factors influencing this investor's experience, especially that less familiar with variable income, is the quality of service provided to these investors in the intermediation of their operations in regulated securities markets.
4. In this regard, a broad system formed by CVM regulations and self-regulation, as well as market practices, establishes a broad and sufficient framework of standards and procedures in different fields, which promote the conditions for this service to occur in an adequate and satisfactory manner. Regarding regulation, it can be stated that it establishes various duties of conduct involving diligence, loyalty, and good faith towards its clients, the duty to verify the adequacy of products, services, and operations to the client's profile, as well as the provision of an ombudsman and procedures for situations involving the interruption of critical business processes.

03/12/2020 SEI/CVM - 1151930 - Circular Letter https://sei.cvm.gov.br/sei/controlador.php?acao=documento_imprimir_web&acao_origem=arvore_visualizar&id_documento=1213677&infra_sistema=… 2/4
5. Nevertheless, a growing number of doubts and complaints from investors have been observed in the CVM's citizen service channels. In some cases, a more detailed analysis suggests that the issue could have been resolved, and certainly much faster, within the intermediary itself.
II – COMPLAINTS TO THE CVM – THE CURRENT DYNAMICS
6. Complaints from intermediary clients reach the CVM through two main channels. In one case, it involves situations of appeal against a decision within the framework of the compensation mechanism for damages provided for in art. 77 of CVM Instruction No. 461/07. As is well known, the entity administering the stock exchange must maintain a mechanism for this purpose, when the damage results from the action or omission of a person authorized to operate, or its administrators, employees, or agents, regarding the intermediation of negotiations carried out on the exchange or the custody services of securities. In these cases, the appeal is reviewed by the Board of the Agency, and at this moment, the Commission receives all information, possibly adopting other measures based on the knowledge of the facts, including of a sanctioning nature.
7. In most cases, doubts and complaints are directed through the CVM's citizen service (SAC), available on its Internet page and operated by the Superintendent of Investor Protection and Orientation (SOI). The analysis of these situations shows that, in most cases, the client seeks the solution of the controversy through the intermediary's usual service channels. When not obtaining the desired solution, they resort to the Securities and Exchange Commission, often without seeking the institution's ombudsman, which has exactly this purpose.
8. In the face of a complaint involving potential irregularity, the Agency makes efforts to clarify what occurred, initially with the intermediary's Ombudsman, who plays a role both in the treatment and effective resolution of client complaints not resolved by usual service channels, as well as in attending to the Securities and Exchange Commission when the client's complaint is sent to the regulator. Some cases, due to their potential sanctioning nature, lead to the initiation of administrative proceedings, which will generally be instructed by the Superintendent of Market and Intermediary Relations (SMI).
9. In all these cases, the time to solution increases considerably, and it is important to highlight that there are cases where the ombudsman is not even contacted, although it plays an important role in achieving the solution, within the intermediary, of complaints that are not resolved by the usual service channels, in accordance with CVM Instruction No. 529/12.
10. It is important to emphasize that the role of the Ombudsman is not limited to adopting measures to solve the client's demand. It is also their responsibility to support the adoption of measures that prevent the repetition of operational and service failures, which favors not only the improvement of service to users of their services, but also avoids that a large number of demands are directed, unnecessarily, to investor protection agencies and entities.
11. It is considered unnecessary, in the context of this circular, a complaint directed to the CVM to request support to resolve operational issues inherent to the service provided by the financial institution, which, in theory, could have been solved, to a large extent, by the usual service channels or, alternatively, by the ombudsman services.
III – POSSIBILITIES FOR IMPROVEMENT

03/12/2020 SEI/CVM - 1151930 - Circular Letter https://sei.cvm.gov.br/sei/controlador.php?acao=documento_imprimir_web&acao_origem=arvore_visualizar&id_documento=1213677&infra_sistema=… 3/4
12. It should be highlighted that transparency in the intermediation market is a requirement established by CVM Instruction No. 505/11, as provided in its art. 30, prohibiting the intermediary from privileging its own interests:
Art. 30. The intermediary must conduct its activities with good faith, diligence, and loyalty towards its clients.
Sole paragraph. The intermediary is prohibited from privileging its own interests or those of persons linked to it to the detriment of clients' interests.
13. In this context, an unresolved controversy with the intermediary brings the possibility of image risk to the securities market itself.
14. To mitigate this risk, in case the controversy has not been resolved with the intermediary, the investor must have adequate knowledge that they can seek the regulator's assistance.
15. And to better handle the complaint that may be presented by the investor to the CVM, the supporting information and documents, when properly presented, allow for a more expedient forwarding of the case, bringing certainty to the investor that their complaint will be adequately analyzed, as well as ensuring the integrity of the securities market in the intermediary's conduct, in accordance with art. 32, initial part of item I, of CVM Instruction No. 505/11, which states:
Art. 32. The intermediary must:
I – safeguard the integrity and regular functioning of the market (...)
16. Thus, based on the experience of cases analyzed by the CVM and considering, furthermore, the promising projections of a continuous increase in the number of investors in the capital market, which will bring new challenges for the intermediaries' service departments, but also for the Agency, including with regard to supervision, it is that SMI and SOI bring the following recommendations.
III.1 - Improve the degree of information to the user
17. The intermediary's service channels must be available, in an easily accessible location, on the intermediary's electronic page, in their 'home broker' and applications, as well as in other interfaces offered to their clients.
18. We also recommend that intermediary websites clearly inform, the channels for complaints to the CVM (Citizen Service) and to the MRP. Additional information about the required or recommended documents would certainly be useful for clients.
19. Regarding complaints to the CVM, the following documents are considered necessary for adequate documentation:
a) service protocol with the intermediary; b) electronic messages exchanged with the intermediary or its agents (e-mail, chat, electronic message, etc.); c) correspondence received from the intermediary or its agents; d) advertisements made available by the intermediary or its agents; e) proposals forwarded by the intermediary or its agents; f) photos, videos, screenshots, telephone recordings, or any other type of document that supports the controversy presented by the client. III.2 - Strengthen the performance of service channels and the ombudsman

03/12/2020 SEI/CVM - 1151930 - Circular Letter https://sei.cvm.gov.br/sei/controlador.php?acao=documento_imprimir_web&acao_origem=arvore_visualizar&id_documento=1213677&infra_sistema=… 4/4
20. At a time when there is an unprecedented growth in the number of investors in the capital market, it is even more important that the usual service channels of intermediaries are adequate to handle the quantity of inquiries and complaints and the type of demand presented by users, especially those less familiar with the capital market.
21. Even more important, at this moment, is the performance of the Ombudsman. Information about this channel must be clear in the investor service process, through usual channels.
22. More than that, it is fundamental that it has adequate resources and autonomy to effectively perform the role expected of it, in accordance with CVM Instruction No. 529/12. The ombudsman's performance in recommending the adoption of corrective measures for repetitive problems, such as custody transfers, and improving the functioning of customer services avoids new occurrences in the future and contributes to a better investor experience.

Sincerely,

Document electronically signed by Francisco José Bastos Santos, Superintendent, on 12/03/2020, at 12:57, based on art. 6, § 1, of Decree No. 8.539, of October 8, 2015.
Document electronically signed by Jose Alexandre Vasco, Superintendent, on 12/03/2020, at 17:45, based on art. 6, § 1, of Decree No. 8.539, of October 8, 2015.
The authenticity of the document can be confirmed on the site https://sei.cvm.gov.br/conferir_autenticidade, informing the verification code 1151930 and the CRC code 6C21E606.
The authenticity of this document can be verified by accessing https://sei.cvm.gov.br/conferir_autenticidade, and typing the "Verification Code" 1151930 and the "CRC Code" 6C21E606.
Reference: Process No. 19957.010113/2019-61 SEI Document No. 1151930