Pre-contractual information in mortgages: FISE and the duty to warn (post-2016)

Taking out a home loan is a decisive step in a life project, committing the borrower over a long period of time. The complexity of the offers and the financial stakes involved make pre-contractual information essential. Since the major reform of 2016, resulting from the transposition of the European directive on home credit (MCD), the legislator has strengthened the obligations of lenders to ensure informed consent and protect borrowers against the risk of over-indebtedness. Understanding these mechanisms, and in particular the role of the Fiche d'Information Standardisée Européenne (FISE) and the banker's duty to warn, is essential before committing yourself.

The European Standardised Information Sheet (ESIS): a central document

The FISE became the cornerstone of pre-contractual information for home loans after 2016. Its main objective is to enable borrowers to clearly understand the features of the proposed loan offer and to compare it effectively with other offers available on the market.

Objectives and role of the FISE

Established by article L. 313-7 of the Consumer Code, the FISE aims to standardise the presentation of the essential information relating to an offer of home credit. It must be provided to the borrower free of charge, on paper or in hard copy, no later than when the offer of credit is issued. This single document enables the borrower to:

• Understand the terms of the loan Interest rate, term, instalments, total cost, ancillary costs, etc.
• Assess the implications of credit In particular, the risks associated with variable rates and foreign currency loans.
• Compare offers : A standardised format makes it easier to compare different banking proposals.
• Make an informed decision By having all the relevant information before making a commitment.

FISE therefore plays a central role in rebalancing the relationship between the lender, who is a knowledgeable professional, and the borrower, who is often a layperson in financial and legal matters. For a broader overview of the changes introduced, see our complete guide to mortgages post-reform 2016.

Detailed content and mandatory information

The precise content of the FISE is detailed in article R. 313-4 of the French Consumer Code and its appendix. It must include, clearly and concisely, the following sections:

1. Identity of the lender (and the credit intermediary where applicable).
2. Main features of the loan Amount, term, type of loan (amortising, bullet, etc.), purpose of financing.
3. Interest rates and other charges :

• The Annual Percentage Rate (APR), a key indicator of the total cost of credit.
• The borrowing rate (nominal), its type (fixed, variable, revisable) and any variation terms.
• Details of all charges included in the APR (administration fees, compulsory guarantees, compulsory insurance, valuation of the property, etc.).
• Charges not included in the APR (notary's fees, early repayment penalties, etc.).

4. Number and frequency of payments.
5. Amount of each payment (deadline).
6. Indicative timetable (compulsory and detailed for fixed-rate loans).
7. Additional obligations Conditions relating to borrower's insurance and the guarantees required (mortgage, deposit, etc.).
8. Early repayment Conditions, any indemnities (IRA) and how they are calculated.
9. Variable characteristics For variable-rate loans, a simulation of the impact of a variation in the interest rate on maturities, duration and total cost, as well as a risk warning. For foreign currency loans, an illustration of the impact of an exchange rate fluctuation.
10. Other borrower rights Reflection period, right of withdrawal for ancillary services.
11. Claims Contact details for the lender's complaints department and the relevant ombudsman.
12. Consequences of non-compliance with commitments by the borrower (default).
13. Further information (on a separate document).
14. Supervisory authorities (ACPR in particular).

The omission or inaccuracy of this information, particularly the APR, may result in penalties for the lender, principally forfeiture of the right to interest (articles L. 341-25 and L. 341-26 of the French Consumer Code).

Terms and deadline for submission

The FISE must be delivered at the latest when the credit offer is issued (article L. 313-7). If general information or an initial simulation have been provided previously (via a Fiche d'Information Précontractuelle - FIP -, for example), the final FISE must include the specific terms and conditions of the firm offer. It must be provided on paper or any other durable medium (PDF sent by email, secure customer area, etc.).

The lender must be able to prove that it has in fact given this form to the borrower. The mere mention in the loan offer signed by the borrower of having received it is only an indication that the lender must be able to corroborate with other evidence in the event of a dispute (Cass. 1re civ., 7 June 2023, no. 22-15.552).

The lender's duty to warn

In addition to simply providing standardised information, the lender has a more active obligation: the duty to warn. Established by case law and enshrined in law by the 2016 reform, the purpose of this duty is to alert borrowers to the specific risks that the proposed credit could entail.

Foundation and development

Initially established by case law (in particular Cass. Ch. mixte, 29 June 2007, no. 06-11.673), the duty to warn was codified in article L. 313-12 of the Consumer Code by the Order of 25 March 2016: "The lender or credit intermediary shall warn the borrower free of charge when, in view of the borrower's financial situation, a credit agreement may entail specific risks for the borrower".

This duty supplements the obligation to provide information. It is no longer simply a question of describing the product, but of drawing the borrower's attention to the suitability of the loan for his personal situation and to the potential dangers, particularly the risk of over-indebtedness.

Conditions of use

The duty to warn is not systematic. Its application depends on two cumulative conditions:

1. The quality of the borrower : Case law has long reserved this duty to borrowers uninformedIn other words, those who do not have the necessary skills and knowledge to appreciate the scope of their commitments and the risks involved. Whether a borrower is informed or not is assessed on a case-by-case basis, depending on his or her experience, profession and level of financial knowledge. The 2016 codification does not explicitly repeat this distinction, but the spirit of the text and subsequent case law suggest that it remains relevant. The obligation is strengthened in the case of a borrower who is clearly a layperson.
2. The existence of a specific risk The lender must warn the borrower if the credit presents a particular risk. in view of its financial situation. This is mainly aimed at risk of excessive debtThis is the risk that the borrower will not be able to meet his repayment obligations in view of his income, expenses and assets. This risk must be assessed at the time the credit is granted, on the basis of the information gathered during the credit check. assessing the borrower's creditworthiness (set out in article L. 313-16). Credit that is unsuited to the borrower's financial capacity triggers this duty to warn. Recent case law specifies that the assessment takes into account all resources, including the value of the property financed (Cass. 1re civ., 9 November 2022, no. 21-16.846).

Failure to comply with this duty to warn gives rise to civil liability on the part of the lender. The loss that can be compensated generally corresponds to the borrower's loss of opportunity not to take out the credit if he had been correctly warned of the risks. The limitation period for an action for breach of the duty to warn runs from the date on which the unpaid sums fall due, and not from the conclusion of the contract (Cass. Com., 25 January 2023, no. 20-12.811).

Distinction from the duty to advise

It is important not to confuse the duty to warn with the duty to advise.

• The duty to warn is a negative obligation: to warn of a risk. The lender must advise against the transaction if it is clearly unsuitable or dangerous for the borrower.
• The duty to advise (or advisory service, articles L. 313-13 and L. 313-14) is a positive obligation: to guide borrowers towards the solution best suited to their needs and objectives from among the products available. There may be a charge for this service if it is provided independently. The lender is not systematically bound by a general duty to advise on the appropriateness of the property transaction itself, but must ensure that the credit product offered corresponds to the needs expressed by the borrower.

A warning is therefore a minimum security obligation, while advice implies a process of optimisation for the borrower.

Other relevant pre-contractual information

In addition to the FISE and the duty to warn, other pre-contractual information applies to the mortgage offer.

• Advertising and general information Even before the FISE, all advertising with figures must comply with strict presentation rules (APR, total cost, term, identity of the lender, etc., cf. articles L. 313-3 to L. 313-5). In addition, the lender must make clear general information on its products available at all times (articles L. 313-6 and R. 313-3). These elements constitute a first layer of information for borrowers exploring the market.
• The right explanations Article L. 313-11 requires the lender to provide, free of charge, "adequate explanations" of the offer and ancillary services, enabling the borrower to determine whether they are suited to his or her needs and financial situation. This goes beyond simply handing over the FISE and involves a personalised discussion to ensure that the key elements and consequences of the credit (including default) are fully understood.
• Information on loan insurance The Standardised Insurance Information Sheet (Fiche Standardisée d'Information sur l'Assurance - FSI Assurance), which is separate from the FISE for the loan, must be provided as soon as the first simulation is carried out. It details the cover provided, the cost of the insurance (expressed in terms of the Annual Percentage Rate of Insurance) and reminds you of your right to choose your insurer freely (delegated insurance).

The impact of pre-contractual obligations

All of these pre-contractual information and warning requirements, which have been strengthened since 2016, aim to provide better protection for property borrowers. By giving them access to clear, comprehensive, standardised and personalised information, and by alerting them to potential risks, the law seeks to ensure that their consent is more free and informed.

For lenders, these obligations imply greater rigour in the evaluation of applications, the formalisation of offers and dialogue with customers. Failure to comply with these obligations can result in significant penalties, ranging from partial or total forfeiture of the right to interest to civil liability. The complexity of these rules and the high financial stakes involved often mean that borrowers need to be extra vigilant.

If you feel that your rights with regard to pre-contractual information have not been respected when you take out your home loan, or if you have any questions about an offer you have received, please do not hesitate to contact our law firm for an analysis of your situation.

Sources

• Consumer Code: articles L. 313-1 et seq. (in particular L. 313-3 to L. 313-16), R. 313-1 et seq. (in particular R. 313-3, R. 313-4), L. 341-21 et seq.
• Order no. 2016-351 of 25 March 2016 on consumer credit agreements relating to immovable property for residential use.
• Law no. 2017-203 of 21 February 2017 ratifying the aforementioned ordinance.
• Court of Cassation case law (cited in the text).