The remuneration of a banking and payment services intermediary (IOBSP), whether a broker or agent, is a key issue for any borrower. Far from being a mere technical detail, it has a direct influence on the total cost of credit and can become a source of dispute. The complexity of the applicable rules, combined with uncertainties in the case law concerning its inclusion in the Annual Percentage Rate of Charge (APR), makes this a particularly sensitive issue. Understanding the framework governing these professionals is therefore an essential first step, as we detail in our guide to the obligations of IOBSPs. This article aims to clarify the principles of this remuneration and its practical implications for you, the borrower.
Understanding the remuneration of IOBSPs: principles and prohibitions
The law strictly regulates the way in which an IOBSP can be remunerated. These rules are designed to protect borrowers by ensuring a degree of transparency and preventing abuse. The terms of payment vary according to the category of intermediary, but one golden rule remains: no sum may be demanded before the loan funds are actually made available to you. This requirement for clarity is part of a wider set of duties, including the following information obligations of IOBSPs towards their customers.
Who pays the IOBSP?
The answer to this question depends directly on the status of the intermediary you are dealing with. There is a fundamental distinction depending on the nature of the mandate.
If you use the services of a broker (COBSP), they are acting under a mandate from you. Logically, therefore, it is you, the customer, who is liable for their remuneration, generally in the form of fees or brokerage charges. On the other hand, if the intermediary is a credit institution agent (MEOBSP or MOBSP), he acts on behalf of one or more banks. In this case, their remuneration is paid by the mandating institution, not by you. Finally, intermediary agents (MIOBSP) are remunerated by the IOBSP that commissioned them (broker or other agent).
Prohibition on collection before payment of funds
This is a fundamental rule of borrower protection, laid down in article L. 519-6 of the French Monetary and Financial Code. It is formally forbidden for an IOBSP to receive the slightest sum of money (commission, application fees, research fees, etc.) before the actual payment of the funds lent by the bank. In other words, you do not have to pay anything to the intermediary until you have received the money for the loan.
Failure to comply with this ban carries severe penalties. Offences carry penalties of up to six months' imprisonment and a €7,500 fine. In civil law, any invoice issued before the funds have been released may be annulled by a judge. There is one notable exception to this principle in the case of independent advice on home loans, where the IOBSP may be remunerated for this advice alone, even if no loan is granted, but this activity is highly regulated.
Case law on unfair terms
The question of the validity of remuneration clauses in brokerage mandates has given rise to some enlightening court rulings. A decision by the Pau Court of Appeal, for example, validated a clause that made the broker's remuneration payable as soon as a loan offer was issued by a bank, even if the customer had found the offer on his own. However, this validity was subject to an essential limitation: the clause only applied for the duration of the brokerage mandate, which the customer could also terminate at any time.
This decision shows that the courts are seeking a balance. They are protecting the broker's work against a client trying to escape his remuneration, but only if the clause is limited in time and does not create a significant imbalance. A clause that bound the client indefinitely after the end of the mandate would most likely be deemed abusive.
The impact of the remuneration of IOBSPs on the calculation of the TEG/TAEG
One of the most technical and hotly debated questions is whether brokerage fees should be included in the calculation of the Annual Percentage Rate (APR). The answer has direct consequences for the legality of the loan, particularly with regard to the usury threshold. The issue of costs is also linked to the other responsibilities of the intermediary, who must also assess the risks of the loan, which is not unconnected with its duty to warn and analyse solvency of its customer.
Definition and importance of TEG/TAEG
The TEG, or TAEG for consumer credit and mortgages, is much more than just an interest rate. It represents the total, real cost of your credit. It must include not only the interest, but also all the compulsory costs of obtaining the loan: application fees, compulsory borrower's insurance premiums, guarantee costs, etc. It has a dual role. Firstly, it allows you to compare several credit offers objectively. Secondly, it acts as a safeguard against excessive rates, because it is this APR that is compared with the usury threshold to check that your loan is not usurious.
Integrating brokerage fees: a complex issue
Under the former Article L. 313-1 of the Consumer Code (applicable to contracts entered into before 1 October 2016), case law was very divided. Some decisions, notably from the Criminal Division of the Court of Cassation, held that fees paid to an intermediary should systematically be included in the TEG. Other lower courts have taken the opposite view, holding that these fees should only be included if the broker's involvement had been imposed by the bank as a condition for granting the loan. For years, this divergence created considerable legal uncertainty, which led to numerous disputes.
The law applicable since 1 October 2016
Legislation has changed with the transposition of a European directive. The new article L. 314-1 of the Consumer Code, applicable to recent contracts, specifies that the APR must include charges, commissions or remuneration of any kind that are a condition for "obtaining the credit or obtaining it on the terms and conditions stated". In addition, article R. 314-4 explicitly mentions "charges paid or due to intermediaries".
This new, broader wording seems to argue in favour of a more systematic inclusion of brokerage fees in the APR. Indeed, it is difficult to argue that the broker's involvement in helping you to find the loan offer was not a condition for obtaining the credit "on the terms announced". Although the case law on this new text is still developing, the trend seems to be towards better protection for borrowers by taking more exhaustive account of the costs associated with intermediation.
The wear threshold: a limit to be controlled
Whether or not brokerage fees are included in the APR is a major issue, as it can tip a loan over the line between legality and usury. Exceeding this threshold, even by a small amount, has very serious legal consequences for the lender.
Calculating and applying the usury rate
The usury threshold is the maximum legal rate at which a loan may be granted. It is defined as the average effective rate charged by banks during the previous quarter for the same category of loans, increased by one third. The Banque de France is responsible for collecting this data and publishing the usury thresholds, generally on a quarterly basis.
In recent years, high inflation and rapidly rising key rates have created a "scissors effect": lending rates have risen faster than the usury threshold, blocking access to credit for many households. To remedy this situation, the authorities temporarily introduced a monthly calculation of the usury rate between February 2023 and January 2024, before reverting to a quarterly calculation.
The consequences of a usurious TEG/TAEG
A loan where the APR exceeds the usury threshold in force at the time the loan is taken out is considered to be a usurious loan. The penalties are both criminal and civil. Under criminal law, the lender is liable to imprisonment and a fine of up to 300,000 euros. On the civil side, the penalty is the nullity of the interest clause. In practical terms, the interest already paid must be returned to the borrower and deducted from the outstanding capital. Future interest is calculated at the legal interest rate, which is often much lower than the contractual rate. This underlines the importance of scrupulous calculation of the APR.
Given the complexity of these rules and the financial stakes they represent, a precise analysis of your loan contract and brokerage mandate is often necessary. An incorrect TEG, an unfair remuneration clause or premature invoicing may give rise to legal action. If you have any doubts about the charges that have been applied to you, our firm of lawyers, experts in banking and finance law can analyse your situation and advise you on what action to take to defend your rights.
Sources
- Monetary and Financial Code
- Consumer Code
- Civil Code
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