The intermediary in banking and payment services (IOBSP), more commonly known as a broker, plays a central role in the search for finance for many individuals and businesses. Yet the precise scope of their legal obligations remains a source of legal debate and uncertainty. At the heart of this controversy are two concepts usually reserved for lending institutions: the duty to warn and the duty to analyse the customer's solvency. Recent case law tends to impose these responsibilities on IOBSPs, often without a clear textual basis, creating a complex situation for intermediaries and their customers alike. This situation is part of the wider context of general obligations of IOBSPsThe contours of this controversy are constantly evolving. This article aims to decipher this controversy and its practical implications.
The duty to warn: definition and application in the banking sector
Before examining its contested application to IOBSPs, it is essential to understand the nature of the duty to warn, a creation of the courts initially designed for banks.
What is the duty to warn?
The duty to warn is a legal obligation that requires a credit professional to alert an uninformed customer to the specific risks involved in a transaction. In practical terms, this means drawing the borrower's attention to the risk of excessive indebtedness that the proposed loan could entail in relation to the borrower's financial capacity. This duty lies somewhere between simple information and advice. It is not for the lender to decide whether the transaction is appropriate for the customer, but it is for the lender to ensure that the customer is fully aware of the potential dangers to his or her financial situation. This is a warning, not a prohibition.
Application to bank lenders
Historically, banks, in their capacity as credit providers, were the first to be subject to this duty. The Court of Cassation has gradually built a legal regime around this obligation, taking the view that bankers, as professionals, have knowledge of the risks that 'lay' or 'uninformed' customers do not. The aim is to rebalance the contractual relationship by protecting the most vulnerable party. The implementation of this duty therefore depends on two cumulative conditions: an uninformed borrower and a loan presenting a risk of excessive indebtedness.
Analysis of customer solvency by IOBSPs: a controversial obligation
In order to warn against a risk of indebtedness, it must first be assessed. This raises the question of whether IOBSPs are obliged to analyse the solvency of their customers, a task traditionally performed by the end lender.
Customer information requirements
Positive law, in particular the Monetary and Financial Code, requires IOBSPs to gather a certain amount of information from their customers. They must enquire about their financial situation, resources, expenses and existing loans. This collection of information, which is at the heart of the information obligations of IOBSPs towards their customersis sent to the credit institution. The explicit purpose of this is to enable the lender to check the borrower's creditworthiness, as set out in articles L. 312-16 and L. 313-16 of the French Consumer Code.
Interpretation of texts: no obligation to analyse
A careful reading of the regulations, in particular article R. 519-21 of the Monetary and Financial Code, shows that the IOBSP has an obligation to collect information, but not to analyse it. The IOBSP's role is to assemble the documents in the file and forward them to the lender. It is the lender, and the lender alone, who has the tools, the data and the legal obligation to carry out an in-depth study of creditworthiness before granting finance. The IOBSP acts as a facilitator and transmitter of information, not as a credit risk analyst. Imposing such an analysis on the intermediary would be tantamount to distorting his role and creating a redundancy with the banker's mission.
The position of the lower courts and the Court of Cassation
Despite the apparent clarity of the texts, judicial practice reveals a different trend. In recent decisions, several lower courts have penalised IOBSPs for failing to check the solvency of their customers. These rulings impute to intermediaries a responsibility that seems to go beyond the strict legal framework. The reasons given for these rulings are often not very detailed, merely asserting the existence of such an obligation without basing it on a precise legal analysis of the texts. This trend, which is criticised by some legal scholars, creates considerable uncertainty for brokerage professionals, who are given duties that are not explicitly provided for by law.
The duty of IOBSPs to warn: no legal basis challenged by case law
The confusion is exacerbated when the courts extend the duty to warn to IOBSPs. This extension raises serious questions of legal consistency, as it seems disconnected from their actual obligations.
The limits of article R. 519-22 of the Monetary and Financial Code
Some try to base the IOBSP's duty to warn on article R. 519-22 of the Monetary and Financial Code. This stipulates that the intermediary must "draw the customer's attention to the consequences that taking out the contract could have on his financial situation". However, this is a general duty of explanation, which must be provided in all cases. It does not correspond to the strict definition of the duty to warn, which only comes into play when there is a proven risk of excessive debt for an unsophisticated customer. This duty to explain is also distinct from the the broker's duty to advisewhich implies a personalised recommendation. Confusing this obligation to provide information with a duty to warn is a broad interpretation of the texts.
Jurisprudence of the Court of First Instance and the Court of Cassation
However, several rulings have taken this step. Courts of Appeal and even the Cour de Cassation have explicitly recognised the existence of a duty to warn on the part of the IOBSP, condemning it jointly and severally with the lending bank. In one notable case, the highest court affirmed that when faced with a complex loan presenting a risk of negative amortisation, the intermediary had a "duty to warn of this risk". These decisions, which are often handed down without detailed textual justification, seem to be guided by a concern for maximum protection of the borrower, but they do so at the cost of distorting the rules of liability.
Practical implications of recognising such a duty
The recognition of a duty to warn for IOBSPs without imposing a formal obligation to analyse solvency creates a major contradiction. How can a broker validly warn his customer against the risk of excessive debt if he has neither the means nor the legal obligation to assess it accurately? The result is considerable legal uncertainty. IOBSPs are exposed to the risk of liability for failing to warn of a situation that they are not required to analyse. This confusion of roles weakens the entire credit distribution chain and makes the boundaries between the responsibilities of each player increasingly porous.
The boundaries between the obligations of lenders and those of intermediaries have become blurred, creating legal uncertainty that is detrimental to both professionals and their customers. Legislative clarification or more reasoned case law would be desirable to stabilise the applicable rules. If you are faced with a dispute concerning the obligations of a banking intermediary, an in-depth analysis of your case is essential. Our team of lawyers with expertise in banking and finance law is there to advise you and defend your interests.
Sources
- French Monetary and Financial Code, in particular articles L. 519-1 et seq. and R. 519-19 et seq.
- Consumer Code, in particular articles L. 312-16 (consumer credit) and L. 313-16 (property credit).
- Case law from the Cour de cassation and the Courts of Appeal relating to the obligations of credit professionals.
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