Excessive or unsuitable lending: holding the bank to account
Your bank granted a loan without verifying your ability to repay. You discover that the annual percentage rate was incorrect, or that no one warned you about the risk of over-indebtedness. The loan turns sour, and the consequences follow: over-indebtedness, seizure, loss of your property.
Under French law, a bank that grants a loan owes a duty to warn (devoir de mise en garde) to the non-sophisticated borrower. It must ensure the loan is suited to the client’s financial situation and alert them to the risk of excessive debt. This duty, established by the Cour de cassation in 2007 and codified in Article 2299 of the French Civil Code, is the primary basis for liability claims against credit institutions.
The duty to warn – Article 2299, French Civil Code
The professional creditor owes a duty to warn to any natural person guarantor where the guarantor’s commitment is unsuited to their financial capacity. This provision, introduced by the Order of 15 September 2021, codifies a judge-made obligation that also applies to non-sophisticated borrowers.
Our firm handles
- Analysing the loan agreement and verifying the APR
- Determining the borrower’s status (sophisticated or non-sophisticated) – a decisive factor in the outcome
- Establishing a breach of the duty to inform or the duty to warn
- Assessing the loss suffered (loss of chance, direct financial loss)
- Amicable negotiation with the bank or court proceedings before the Tribunal judiciaire
Withdrawal of credit facilities and abusive credit support: defending your business
Your bank has withdrawn your overdraft facility without notice. It has terminated a credit line on which your cash flow depends. Or, conversely, it maintained credit artificially while your financial position was irretrievably compromised – and your creditors are bearing the consequences.
Article L. 313-12 of the French Monetary and Financial Code requires the bank to give 60 days’ written notice before reducing or terminating any open-ended credit facility. The Cour de cassation has held that the borrower may request the reasons for the withdrawal even after the notice period has expired, and that failure to respond engages the bank’s liability (Cass. com., 30 November 2022, No. 21-17.703).
Abusive credit support – Article L. 650-1, French Commercial Code
Where insolvency proceedings have been opened, creditors may not be held liable for the loss caused by the credit they provided, except in cases of fraud, manifest interference in the debtor’s management, or disproportionate security taken in return. This provision creates a protective shield for banks, which the practitioner must know how to work around.
Our areas of intervention
- Challenging the wrongful termination of banking facilities (failure to give notice, lack of justification)
- Liability claims for abusive credit support in the context of insolvency proceedings
- Defending against unfounded demands for early repayment
- Negotiating settlement agreements with the bank
- Representation before the Commercial Court and the Tribunal judiciaire
Bank fraud: asserting your rights against your bank
A fraudulent transfer was executed from your account. A card transaction you never authorised. Phishing or identity theft. The bank invokes your negligence to refuse reimbursement.
The French Monetary and Financial Code requires the payment service provider to prove that the disputed transaction was authenticated, duly recorded and not affected by any technical deficiency – before it can even raise the customer’s gross negligence (Articles L. 133-19 and L. 133-23). Recent case law from the Cour de cassation reinforces this burden of proof (Cass. com., 20 November 2024, No. 23-15.099).
Our firm handles
- Disputing unauthorised payment transactions
- Analysing the strong customer authentication procedure implemented by the bank
- Pursuing the liability of the payment service provider
- Recovering fraudulently debited sums
How we work
Bank liability covers a broad field: from poorly structured loans to payment fraud, through withdrawal of financing and failures of vigilance. Each dispute has its own rules, time limits and pitfalls.
| Obligation | Scope | Beneficiary | Sanction |
|---|---|---|---|
| Disclosure | Inform the client of the characteristics of the product or service | All clients | Damages |
| Duty to warn | Alert the client to the risk of over-indebtedness | Non-sophisticated borrowers and guarantors | Loss of chance, reduction of claim |
| Duty to advise | Direct the client to the product suited to their profile | Variable (enhanced for investment services) | Damages |
| Vigilance | Detect apparent anomalies in transactions | The client and third parties | Civil liability, ACPR sanctions |
Under French law, the limitation period is 5 years from the date the damage occurs (Article 2224, French Civil Code). For the duty to warn, time begins to run not from the date of the loan, but from the moment the loss materialises – typically when the first payment is missed or when the lender accelerates the loan.
Our firm proceeds in stages: audit of the file, identification of breaches, assessment of the loss, then an attempt at amicable resolution before commencing, if necessary, proceedings before the Tribunal judiciaire or the Commercial Court.
Frequently asked questions
What are the time limits for suing my bank in France?
Liability claims against a bank are subject to a 5-year limitation period. The starting point depends on the nature of the breach: for a failure to warn, time runs from the date the damage occurs (first missed payment, acceleration of the loan), not from the date the loan was signed.
How do I prove the bank’s fault?
Retain all documents: loan agreement, amortisation schedules, correspondence, account statements, any simulations proposed by the bank. In fraud cases, the burden of proof regarding authentication of the disputed transaction lies with the bank, not with you.
What is a “sophisticated” borrower under French law?
The distinction between sophisticated and non-sophisticated borrowers determines whether the duty to warn applies. A company director experienced in credit operations may be classified as sophisticated. An individual taking out a mortgage for the first time generally will not. The classification is assessed on a case-by-case basis.
Can my bank cut off my credit facilities overnight?
No. For any open-ended credit facility, the bank must give 60 days’ written notice (Article L. 313-12, French Monetary and Financial Code). Only seriously reprehensible conduct or an irretrievably compromised financial position can justify termination without notice.
Do you handle urgent matters?
Yes. Some situations require an immediate response: sudden withdrawal of credit threatening cash flow, ongoing bank fraud, imminent seizure. Our firm can act swiftly, including through urgent interim proceedings (refere).