La banking ethics refers to all the rules of professional conduct applicable to credit institutions and their staff, whether they emanate from the profession itself (soft law codes of conduct, charters) or the legislator (hard law Monetary and Financial Code). Far from being a simple moral code, banking ethics constitute a hybrid standards system breach of which exposes the banker to disciplinary sanctions by the ACPR (up to 100 million euros) and to civil liability under ordinary law (art. 1240 of the Civil Code).
What is banking ethics?
Banking ethics are not the same as morality. It is a matter of establishing «rules of the game», i.e. rules that must be followed. rules of professional practice adapted and evolving, designed to provide a framework for the conduct of credit institutions in their relations with customers and markets.
These rules fall between three levels of regulation:
- La state regulation (laws, regulations, European directives) ;
- The professional standards drawn up by the profession (FBF, AFECEI) and approved by the authorities; ;
- The contractual obligations from the account agreement and service contracts.
Case law recognises that disregard of professional ethics provisions may be invoked in support of a civil liability action (Cass. 1re civ., 18 March 1997, no. 95-12.576, concerning medical ethics - principle transposable to the banking sector).
The sources of banking ethics rules
La soft law banking: codes of conduct and professional charters
Historically, ethical rules originated in standards drawn up by the professionals themselves. The French Banking Federation (FBF) is the main player in this self-regulation, alongside the’AFECEI (Association française des établissements de crédit et des entreprises d'investissement, art. L. 511-29 CMF).
In November 2009, the FBF proposed a three-level typology of the standards it develops:
- Professional or ethical standards The standards are applicable to all establishments. Fall within the scope of internal control (Order of 3 November 2014). Binding force.
- Good professional practice Implementation deemed appropriate to meet legal requirements, but not exclusive. Forwarded to ACPR or AMF. Relative force.
- Simple recommendations non-binding.
However, the effectiveness of this self-regulation has shown its limits. The failure of the Charter of basic banking services of 1992 - which failed to guarantee access to banking services for all - led the legislator to intervene by creating the right to account (decree no. 2001-45 of 17 January 2001).
The legislative framework: certification and approval of codes
The legislator has gradually provided a framework for soft law banking by introducing’approval and’approval by the public authorities :
- Ministerial approval (art. L. 611-3-1 CMF, created by the Order of 5 December 2008): the Minister for the Economy may, after obtaining the opinion of the CCLRF (Consultative Committee on Financial Legislation and Regulation), approve by order the codes of conduct drawn up for the marketing of financial instruments, banking transactions and payment services. Approval makes the code mandatory.
- Approval by the ACPR (art. L. 612-29-1 CMF): the ACPR checks the compatibility of codes of conduct with laws and regulations, then approves them in whole or in part. Publication of the approval makes the approved provisions binding on the association's members.
The ACPR may also determine the existence of good professional practice or formulate recommendations. It publishes a compendium of all the codes, rules and best practices it monitors.
The banker's fundamental obligations
The duty to inform
Bankers are required to’inform his customer on the operating conditions of the account, the applicable fees and the characteristics of the products offered (art. L. 312-1-1 CMF). This obligation is reinforced by FBF professional standards: standard extract of rates, standard summary of rate brochures (ACPR decision no. 2013-C-34 and 2013-C-35 of 24 June 2013).
The Court of Cassation has specified that the lender's duty to provide information on the suitability of the risks covered by the group insurance to the insured's personal situation is autonomous and cannot be confused with the simple provision of a notice (Cass. com., 2 May 2024, no. 22-21.642).
The duty to warn
Established by a landmark judgment handed down by the mixed chamber on 29 June 2007 (nos. 06-11.673 and 05-21.104), the banker's duty to warn requires him to check the following financial capacity of the unsophisticated borrower and to alert them to the risks of taking on debt when granting loans.
This assignment has several features:
- It applies only to the’uninformed borrower or guarantor - the burden of proof that the person is an informed person lies with the bank; ;
- For a legal person, (Cass. com., 11 April 2018, no. 15-27.133); ;
- Le damage consists of the loss of the opportunity to avoid the risk that has occurred - even if the borrower is unable to meet the payment of the sums due (Cass. com., 13 February 2019, no. 17-14.785); ;
- La prescription runs from the time the damage occurs (Cass. 1re civ., 5 January 2022, no. 19-24.436).
The Court of Cassation has specified that the duty to warn applies to in the same way to bullet loans than for amortisable loans: it relates exclusively to the unsuitability of the loan to the borrower's financial capacity and to the risk of excessive indebtedness, without any additional specific obligation linked to the nature of the loan (Cass. com., 8 November 2023, no. 22-13.750).
The duty to advise
The duty to advise is distinct from the duty to warn. The existence and scope of this duty vary according to the customer's status (informed or not, professional or consumer) and the nature of the transaction. A court of appeal was able to rule that a payment service provider has no duty to advise its customers, a solution implicitly validated by the dismissal of the appeal (Cass. com., 21 September 2022, no. 21-12.335).
However, when the bank acts as insurance intermediary (loans backed by life insurance), it is subject to stricter obligations under the Insurance Code: duty to provide advice based on an impartial and personalised analysis (art. L. 521-2 C. assur.).
Banking secrecy
Article L. 511-33 of the CMF requires the professional secrecy any member of the Board of Directors and any person involved in the management or administration of a credit institution. This confidentiality is not enforceable against the ACPR, the Banque de France, the judicial authority acting in the context of criminal proceedings, or parliamentary committees of enquiry.
The duty of non-interference
It is not the banker's role to interfere in his customer's affairs. This duty of non-interference is one of the pillars of the banking relationship: the banker does not have to check the validity or appropriateness of transactions carried out by his customers.
However, this duty is not synonymous with absolute passivity: it is articulated with a duty of care forged by case law. The banker cannot remain indifferent to obvious irregularities. The apparent anomaly - a manifest irregularity that the banker cannot ignore - is the threshold above which the duty of vigilance takes over from non-interference.
Who supervises the banks? The role of the ACPR and the CCSF
The ACPR: supervision and approval
L'Autorité de contrôle prudentiel et de résolution (ACPR) plays a central role in supervising banking ethics. In addition to approving codes of conduct (art. L. 612-29-1 CMF), it :
- Checks compliance with approved codes and approved ;
- Issues recommendations (e.g. ACP Recommendation No. 2011-R-01 on the accounts of co-ownership trustees); ;
- Controls the’integration of professional standards in the internal control system of institutions (Order of 3 November 2014).
The CCSF: consultation and monitoring
Le Advisory Committee on the Financial Sector (CCSF, art. L. 614-1 CMF) is responsible for examining issues relating to relations between financial institutions and their customers. The CCSF is made up of equal numbers of professional and customer representatives, and also includes a Member of Parliament and a Senator.
The CCSF is responsible for monitoring pricing practices to individuals and may propose measures to the Minister. The Minister may then ask the ACPR to verify compliance with the commitments made by professional associations within this framework.
The legal value of ethical rules
The question of binding force of the rules of professional conduct has been clarified by two rulings of the Cour de cassation, handed down in other professional fields but whose principles can be transposed to the banking sector:
- Cass. 1re civ. 18 March 1997 (no. 95-12.576, medical ethics): the First Civil Chamber accepts that breach of professional ethics provisions may be invoked in support of a civil liability action; ;
- Cass. com. 29 April 1997 (no. 94-21.424, deontology of chartered accountants): the Commercial Chamber went further, ruling that a breach of a rule of deontology was «sufficient to establish» the existence of a civil fault (in this case, unfair competition).
This position of the Commercial Chamber was criticised by academics (G. Viney): codes of ethics emanate from private individuals, not from the legislature; to require judges to bow to the normative power of professional bodies would be to ignore the hierarchy of sources of law.
However, the nuance is relevant: for codes approved by the Minister or approved by the ACPR, In this way, the normative force is reinforced, which mitigates the criticism.
In any event, the violation of an ethical rule not automatically null and void of the act (Cass. 1re civ, 5 November 1991). The penalties are disciplinary and/or civil, not cancellation of the transaction.
Penalties for breaches of ethics
Disciplinary sanctions imposed by the ACPR
Article L. 612-39 of the CMF provides for a graduated scale of penalties :
- Warning; ;
- Reprimand ;
- Ban on certain operations (maximum 10 years) ;
- Temporary suspension of managers (maximum 10 years) ;
- Resignation of directors ;
- Partial withdrawal of approval ;
- Total withdrawal of approval or deregistration.
The financial penalties can reach 100 million euros or 10 % of annual net sales, and may be imposed in addition to disciplinary sanctions. For executives, the ceiling is €5 million or ten times the benefit received.
Decisions are made public and may be the subject of an appeal. appeal to the Conseil d'État.
Civil penalties
On the basis of article 1240 of the French Civil Code, breach of an ethical obligation may constitute a breach of contract. civil fault involving the institution's liability. The judge uses the ethical standard as a professional standard to assess fault.
The link between administrative police (warning, art. L. 612-30 CMF; formal notice, art. L. 612-31 CMF) and disciplinary sanctions provides the ACPR with a graduated system before initiating a formal sanction procedure.
Specific protection for businesses and local authorities
The VSE/SME Bank Relations Code
Drawn up in 2006 by the FBF, this code sets out commitments in terms of transparencyof response times, It is based on a three-pronged approach: welcoming new entrepreneurs, quality of day-to-day relations, and the credit process. It focuses on three areas: welcoming new entrepreneurs, the quality of day-to-day relations, and the credit process.
La Charter on access to credit for EIRLs (31 May 2011) completes this system: banks undertake not to require collateral on the entrepreneur's personal assets when an external guarantee (Bpifrance, SIAGI, SOCAMA) is available.
The Gissler Charter: a framework for local authorities' structured loans
Signed on December 7, 2009 and entered into force on December 1, 2009.er January 2010, the Gissler Code of Conduct aims to ensure more responsible distribution of structured loans to local authorities. It is based on four pillars:
- Ban speculative products not adapted to the needs of local authorities; ;
- Information strengthened risk management, using a standardised risk scale; ;
- Classification products by risk level ;
- Council strengthened.
The legislator then created a relief fund intended for local authorities that have taken out «toxic loans» (Act of 26 July 2013). Decree 2014-984 strengthened the regulatory framework for local authority borrowing conditions.
Case law has specified that the informed nature of a borrowing authority is assessed in concreto A commune may be considered uninformed despite its public nature (Cass. com., 12 November 2020, no. 18-26.008).
Card payment services for retailers
Banks must provide merchants with an annual detailed summary of their card payment services: breakdown by network, transaction volume, fees charged and optional services.
Banking mobility for professionals
The professional commitments of 2004 and the standards of 2008 provide for controlled deadlines for the change of business account 5 working days for the summary of automatic transactions to be made available, 10 working days for the transfer formalities to be completed.
What should you do if your bank breaches its code of conduct?
There are a number of remedies available to a customer who has been the victim of a breach of professional ethics:
- Banking mediation The FBF Mediation officer can be contacted free of charge. Professional standards are «in many cases enforceable by customers against their bank» (2010 Report by the FBF Mediation officer); ;
- Referral to the ACPR The ACPR may be alerted to a breach of approved codes of conduct and initiate supervisory proceedings; ;
- Civil liability action (art. 1240 C. civ.): breach of a rule of professional conduct may constitute a fault giving rise to an action for damages; ;
- Action for failure to advise or warn If the bank has failed in its duty to warn an uninformed borrower, the loss that can be compensated is the loss of opportunity to avoid the contract.
Frequently asked questions
What is banking ethics?
Banking ethics are all the rules of professional conduct applicable to banks and their staff. These rules, which stem from both the profession (FBF codes, charters) and the law (Monetary and Financial Code), govern relations between banks and their customers. Breach of these rules may result in disciplinary action by the ACPR and civil liability.
What are a bank's main ethical obligations?
The four fundamental obligations are: the duty to inform (conditions, prices, product characteristics), the duty to warn (alerting uninformed borrowers to the risks of indebtedness), the banking secrecy (art. L. 511-33 CMF) and the duty of non-interference (not to interfere in the customer's affairs). There is also a duty to advise on certain transactions.
What are the penalties for breaches of ethics?
The ACPR can impose penalties ranging from a warning to withdrawal of authorisation, together with financial penalties of up to 100 million euros or 10 % of annual turnover. In civil matters, the victim may obtain damages under article 1240 of the French Civil Code.
How can you take your bank to court for failure to provide advice?
Liability claims for breach of the duty to warn are time-barred after 5 years from the date on which the damage occurred. The loss that may be compensated is loss of chance not to have contracted. It must be shown that the borrower was uninformed and that the bank did not check that the credit was appropriate for his or her financial capacity.
What is the banker's duty to warn?
Enshrined by the Court of Cassation in a mixed chamber on 29 June 2007, the duty to warn obliges the banker to alert the customer to the risks involved.’uninformed borrower or guarantor on the risks of excessive debt. This duty is independent: it is not the same as the duty to inform or the duty to advise.
What is the difference between a duty to inform and a duty to advise?
L'obligation to inform relates to the objective characteristics of the product or service (prices, conditions, risks). L’obligation to advise goes further: it requires the banker to recommend a solution tailored to the customer's personal situation, taking into account their needs and financial capacity. Advice implies a value judgement, not information.
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