Banking and payment services intermediaries (IOBSP): a comprehensive guide to their legal obligations and case law

Individuals and businesses wishing to obtain credit or optimise their banking services often turn to an intermediary in banking and payment services (IOBSP). Whether acting as a broker or agent, this professional facilitates the relationship between you and financial institutions. However, their activity is subject to strict regulations, one of the aims of which is to ensure that customers are properly informed in order to protect their interests. The obligations of this intermediary, often unknown to the uninformed, can be a source of disputes, particularly when it comes to payment of fees. This article provides an overview of the rules governing the profession of IOBSP, with links to more detailed information on each essential aspect and an understanding of the advisory role that an IOBSP can play in your business. banking lawyer.

What is an IOBSP and what is its role?

An intermediary in banking transactions and payment services (IOBSP) is a professional, often referred to as a banking intermediary, who, as part of his usual activity, puts a customer in contact with a credit institution or a payment institution in order to carry out a banking transaction (loan, debt purchase, etc.) or a payment service. This concept is defined by article L. 519-1 of the French Monetary and Financial Code: the intermediary does not carry out the transaction himself but acts as a go-between for whom the intermediary is remunerated. Some IOBSPs carry out this activity as a sideline to their main profession.

Banking distribution law distinguishes four categories of IOBSP, a status that determines the extent of their obligations and the way they are remunerated. These are: brokers (COBSP), who act as intermediaries under a mandate from the customer; exclusive agents (MEOBSP), who must work exclusively for a single institution; non-exclusive agents (MOBSP), who work for several institutions; and agents of intermediaries (MIOBSP). All this distribution activity is regulated to ensure the integrity of the market and the protection of borrowers.

What are the conditions for entering the profession?

To work as an IOBSP, you must meet strict requirements, guaranteeing a high level of professional competence and integrity. To become a credit professional, it is essential to demonstrate professional competence. This is obtained by completing a professional training course leading to a qualification, of a minimum duration appropriate to the status sought. There are several levels of IOBSP training: level 1, 2 or 3.

Level 1 IOBSP training, for example, is the most comprehensive and requires 150 hours. Its content is structured into several key modules. The syllabus includes a core curriculum and specialised modules. These modules cover a variety of areas: a module on the legal environment of intermediation (including distribution law and the prevention of overindebtedness), a module on technical fundamentals (home loans, consumer credit, credit consolidation, cash loans), and a module on loan insurance. A new module dedicated to the rules of good conduct is also central to the training. Often delivered via e-learning, the course includes applications and quizzes to validate what has been learnt, and can be supervised by an educational tutor. At the end of the course, candidates, whether self-employed or future employees of a network, must not only obtain a training certificate (sometimes called IOBSP certification), but also validate a training logbook. Other conditions are required for entry to the profession, such as professional indemnity insurance and, for certain categories, a financial guarantee. Access to the profession is completed by compulsory registration on the single ORIAS register, where each intermediary must be registered.

The general obligations of information and diligence of IOBSPs

All IOBSPs, whatever their category, must behave honestly, fairly, transparently and professionally, acting in the best interests of their customers. This general principle, compliance with which is monitored by the Autorité de contrôle prudentiel et de résolution (ACPR), which is part of the Banque de France, translates into specific obligations to provide information and gather intelligence. For a full analysis, see our article on information obligations of IOBSPs towards their customers.

Transparency on status and links of interest

Before taking any action, the intermediary must provide you with clear information about their identity, status and registration number on the ORIAS register, which is publicly accessible online. They must also inform you of any financial links or contractual obligation to work exclusively with one or more credit institutions. This transparency makes it possible to measure its degree of independence.

Explanation of the characteristics of the transaction

The IOBSP is obliged to provide you with a detailed explanation of the essential characteristics of the proposed credit service or contract. In particular, he must draw your attention, with a warning if necessary, to the consequences that the transaction could have on your financial situation. All information must be communicated clearly and accurately and must be formalised on a durable medium (paper document or digital file) so that you can refer to it.

Gathering information on the customer's situation

In order to offer you a suitable solution, the intermediary must find out about your banking knowledge, your financial situation (resources, charges, outstanding loans) and your needs. The aim is to build up a solid file for the lender and to provide the information needed for the creditworthiness analysis. It is essential to note that while the IOBSP collects these elements for the file, the obligation to check repayment capacity falls, in principle, on the final credit institution.

Remuneration of intermediaries: a strict framework

The question of remuneration is a key one, and is strictly regulated by law to prevent abuse. Its impact on the total cost of credit is a major issue, particularly with regard to the usury rate. A detailed study of these issues is available in our article on the remuneration of IOBSPs and its effect on the APR.

The principle of no payment before funds are released

A rule of public policy protects the consumer: an IOBSP may not collect any sum of money or make any payment from you before the bank has actually paid the amount lent, as specified in article L. 519-6 of the French Monetary and Financial Code. This rule, reinforced by provisions in the French Consumer Code, is designed to protect individuals. The only exception concerns "independent advice" on home loans, which may be invoiced for the advice itself, independently of the conclusion of the loan.

The impact of brokerage fees on APR and the usury rate

The inclusion of brokerage fees in the Annual Percentage Rate (APR) has been the subject of debate. The APR should reflect the total cost of credit to the borrower. Jurisprudence has sometimes hesitated, but the tendency is to include these costs when the broker's work on the borrower's file was a condition for obtaining credit on the proposed terms. A miscalculation can result in penalties for the lender. In addition, including this fee in the APR may bring the cost of credit closer to the usury rate, a legal limit that must not be exceeded.

Brokers' specific obligations (COBSP)

Acting as their customer's agent, brokers are subject to more stringent obligations, including a more extensive duty to provide advice. Since the latest reform of the brokerage industry, brokers have also had to meet a new obligation: membership of a professional association approved by the ACPR, which supervises and monitors their activities. Brokers are expected to represent you and defend your interests in dealings with credit institutions. To find out everything you need to know about the scope of this obligation, please read our article on the credit broker's duty to advise.

A reinforced duty to advise

The broker must base his recommendation on an analysis of a sufficient number of credit agreements available on the market. The broker's role is to propose an offer or solution tailored to your needs, and to provide written reasons for the proposal. This advice relates to the credit transaction and its ancillaries, such as borrower's insurance, but does not, in principle, extend to the appropriateness of the transaction financed itself (for example, the appropriateness of a property investment or participative financing).

Liability in the event of breach

If a broker fails in his duty to advise, his professional liability may be incurred as a result of poor execution of his mandate or inadequate advice on the case. The penalty often takes the form of compensation for "loss of opportunity": loss of the chance to obtain more advantageous credit or to avoid taking out an unsuitable loan. The judge has broad discretion to assess the loss.

The role of the broker in the event of a mortgage refusal

When selling property, obtaining a loan is often a condition precedent. If the loan is refused, the sale is cancelled, provided the buyer can prove that he has taken the necessary steps. In this case, the broker plays a crucial evidential role. To find out more about this practical situation, read our article on the role of the broker in the event of a mortgage refusal. The certificate provided by the broker must be precise and detailed if it is to be admissible in court. It must show that the application has been submitted to several banks and that the loan applications, which comply with the terms of the agreement (amount of finance, term, interest rate), have been submitted on time. A simple, general or imprecise certificate of refusal is often considered insufficient, and can put the buyer at fault for not having been able to prove that he had duly taken the necessary steps.

The obligations of IOBSPs provide essential protection for your financial projects. In the event of a dispute or doubt about the practices of your intermediary, a lawyer's analysis is essential to assess your rights. To secure your credit transactions and defend your interests, get in touch with our firm.

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