Impact of the Italian reform of class actions on financial institutions | Hogan Lovells

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The new Italian bill on collective redress (Law No.31 of April 12, 2019) was adopted in 2019 and – after several postponements – finally entered into force on May 19, 2021. Although class actions are available in Italy since 2007, they had not proved successful through the strict eligibility test for class certification.

Thus, the new reformed law can be considered as a real revolution in the field of Italian litigation. It is particularly favorable to applicants because it provides (I) a wider scope and (ii) incentive mechanisms aimed at encouraging recourse to the collective redress system.
From main novelties of the new law:

  1. The new class action is no longer reserved for consumers and end users, and is open to all kinds of damages claims: from now on, class actions can be brought for the execution of “homogeneous rights“by any person (including legal persons and in B2B relations) claiming compensation for damages against the”perpetrator of the harmful behaviorOr ask for injunctive relief.
  1. The new class action lawsuit provides for a double opt-in window. Applicants can now join the group once the action has been accepted, just before the start of the proceedings on the merits, as well as up to 5 months after the decision on the merits is issued.
  1. The new bill introduced economic incentives by providing for a monetary reward, if the action is successful, for the lawyer of the principal plaintiff and for the “Common representative” of style.

The reform brings significant criticism for companies, especially banks and financial institutions, which must prepare to potentially face a greater number of class actions without certainty as to the number of potential group members (and therefore, potential exposure) and increased difficulty in reaching early settlements. It is therefore advisable that they adopt internal policies to mitigate risk exposure and design new defensive strategies.

Collective actions and Italian banks

In Italy, financial institutions had to face class actions even before the entry into force of the new law. In the past, bank customers have brought class action lawsuits against Italy’s first and second largest financial institutions seeking to overturn contractual clauses prescribing overdraft fees to customers. The class actions brought in 2010 and 2012 against the bank Unicredit and the bank Intesa San Paolo in the courts of Rome and Turin did not finally pass the admissibility test while another class action, brought by an Italian primary association of consumers against the bank Intesa San Paolo once again before the Court of Turin, was ruled admissible in September 2013, was executed, and was definitively confirmed in 2019 by the Italian Supreme Court of Cassation. Recently, the Turin Court of Appeal – in line with the 2019 Supreme Court ruling – also admitted to the group a number of opts-ins that had previously been excluded because they did not have the requirement. of notarization of the signature on the contracts concerned. Thus, the bank was ordered to reimburse the illegal charges in favor of all members of the group, including opters-in.

Recently, Italy has seen an increase of cybersecurity and data breach litigation which should expand further. In many cases, banks have been sued by customers for alleged abusive access to their personal data. In particular, on June 10, 2020, the Italian data protection authority (Garante Privacy) ordered the Unicredit bank to pay € 600,000 for the data breach that occurred in 2016 to the detriment of around 700,000 customers. Although the bank denounced the abusive access to its databases, Garante Privacy proceeded to sanction Unicredit having noted numerous violations of the Italian Privacy Code.

In recent times, Italy has also seen an increase in cryptocurrency dispute; the investors allege violations of the Italian consolidated financial law and the anti-money laundering regulation by financial entities and request the reimbursement of the amounts converted and / or invested.

More and more disputes may arise in the above contexts in the near future due to the entry into force of the new Italian class action suit, characterized by a broader scope and which will allow clients seeking to pursue class actions and compensation for damages to benefit from increased procedural rules in favor of claimants and substantial economic incentives for claimants’ lawyers and group representatives.

International update and next steps

November 24, 2020 marks final EU approval Directive 2020/1828 of the European Parliament and of the Council on representative actions for the protection of the collective interests of consumers (and repealing Directive EC 2009/22) regulate the initiation by “qualified entities” of collective injunction and reparation measures through autonomous and cross-border collective actions covering violations by traders of the provisions of 66 European regulations. The directive obliges EU member states, including Italy, to adapt their procedural collective action and redress mechanism by December 25, 2022, with application from June 25, 2023.

It remains to be seen how the implementation of the Directive and the reformed Italian collective redress system will combine.


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