Banking law is a branch of private law that governs banking transactions, the service providers authorised to carry them out and the relationships that these service providers maintain with their customers. From the outside, it is a technical body of prudential rules dominated by the Monetary and Financial Code. Seen from the customer's point of view, it is something else: an arsenal of obligations incumbent on the banker, which most individuals and businesses are unaware can provide them with formidable means of defence when a loan goes bad, fraud is committed on their account or they are asked to provide disproportionate security.<\/p>\n
This guide takes the approach of explaining the two sides of banking law: regulation - which structures the institutional landscape - and litigation, which is the main focus of a banking lawyer's work. For each major topic, it refers to specialist guides that go into greater detail on technical issues.<\/p>\n
Banking law is part of economic law: it regulates an activity - financial intermediation - because of the risks it poses to savings, credit and, consequently, to the stability of the financial system itself. This matrix explains its physiognomy. Banking law is both a regulatory law - the ACPR sets standards, issues approvals and sanctions breaches - and a contractual law, made up of account agreements, loan contracts, guarantees and payment services agreements, all subject to a strict formalism designed to protect the customer.<\/p>\n
This dual nature makes banking law a specialist area. Prudential rules (solvency ratios, capital requirements, anti-money laundering measures) are of interest to banks; contractual rules and case law on banker liability are of interest to clients. A lawyer specialising in banking law most often works on this second aspect: he or she assists borrowers in difficulty, disputed guarantors, businesses that have been the victims of fraudulent transfers, and business owners seeking to hold their bank liable following improper support or, conversely, the abrupt termination of a loan.<\/p>\n
The characteristic feature of this area is the constant tension between contractual freedom and protective formalism. The bank is free to grant or refuse credit; once it has granted credit, it is bound by a series of obligations which, in the event of default, can transform a definite claim into a disputed commitment and, sometimes, into a loss for the bank.<\/p>\n
The sources of banking law pile up and form a dense landscape. The reference text is the Monetary and Financial Code<\/strong>, Article L. 311-1 of the French Banking Code, revised in 2000, sets out the rules governing credit institutions, their authorisations, activities and supervision. Article L. 311-1 defines banking as the receipt of repayable funds from the public, credit transactions and payment services. This definition is central: it delimits the scope of the banking monopoly and determines who may, and who may not, lend money on a regular basis.<\/p>\n \u00abBanking operations include the receipt of funds repayable from the public, credit transactions and payment banking services\u00bb. This definition determines the scope of the banking monopoly reserved by article L. 511-5 for authorised credit institutions. Any person who habitually carries out these operations without authorisation is liable to criminal penalties.<\/p>\n<\/p><\/div>\n The Monetary and Financial Code is supplemented by the Consumer Code<\/strong>, Books III and VII of the Act govern consumer credit, home loans, debt consolidation, guarantees, overindebtedness and banking inclusion. Visit Civil Code<\/strong>, Since the reform of surety bonds in 2021 (Order no. 2021-1192), the common law on personal sureties, which had previously been split between several pieces of legislation, has been incorporated into the new law. The Commercial code<\/strong> provides the rules applicable to commercial paper - bills of exchange, promissory notes - and to the treatment of companies in difficulty, whose interactions with the banker are permanent.<\/p>\n In addition to this national base, there is a dense body of European legislation. Through the Single Supervisory Mechanism, the European Central Bank directly supervises the largest institutions in the eurozone. The Capital Requirements Directive (CRD), the Payment Services Directive (PSD2), the Mortgage Credit Directive and the Consumer Credit Directive impose harmonised standards that French law transposes. Lastly, the case law of the Cour de cassation plays a decisive role: since the 2000s, it has shaped the duty to warn, the principle of proportionality in guarantees and the system of accelerated repayment.<\/p>\n The French banking landscape is based on a simple principle, set out in Article L. 511-5 of the Monetary and Financial Code: only lending institutions<\/strong> Authorised institutions may carry out banking transactions on a regular basis. There are some modifications to this monopoly - finance companies, payment institutions (PEs), electronic money institutions (EMEs), account information service providers - but the rule of principle remains: anyone wishing to collect savings and lend on a regular basis must be authorised.<\/p>\n Approval is issued by the\u2019Prudential Control and Resolution Authority (ACPR)<\/strong>, The ACPR is an independent administrative authority attached to the Banque de France. The ACPR does more than just open doors: it continuously monitors institutions, checking their financial soundness and penalising breaches of prudential and customer protection rules. Its Enforcement Committee regularly issues fines of several million euros, the public list of which is a valuable indicator of regulatory sticking points. Visit guide dedicated to the ACPR<\/a> details its remit, its composition and the way in which it coordinates its activities with those of the Autorit\u00e9 des march\u00e9s financiers (AMF) and the European Central Bank.<\/p>\n Above the ACPR, the ECB directly supervises the so-called \u00absignificant\u00bb banks in the eurozone and coordinates the work of national supervisors. Below this, the institutions' internal bodies - compliance, internal control, anti-money laundering - provide the first level of supervision. The result of this layered system is a banking law in which administrative sanctions and civil liability overlap: depending on the point of view, the same breach may be punishable by a fine from the ACPR and a civil liability claim.<\/p>\n This is the heart of banking litigation. Under the Monetary and Financial Code, the Consumer Code and established case law, bankers are bound by a series of obligations, failure to comply with which gives rise to liability. There are four main obligations.<\/p>\n L'obligation to inform<\/strong> requires bankers to provide customers with clear, comprehensive and comprehensible information, both when the product is taken out and during its performance. This requirement permeates all banking consumer law, including pre-contractual credit information, the European Standardised Information Sheet for home loans, annual information for guarantors, monthly account statements and advance pricing of services. Failure to provide this information may result in damages or even forfeiture of the right to interest on loans to individuals.<\/p>\n Le duty to warn<\/strong>, is the most formidable of these obligations. A banker who grants credit to an uninformed borrower - i.e. a customer whose profession or experience does not enable him or her to assess the risk of the transaction alone - must warn the borrower of the risk of excessive indebtedness arising from the credit. This obligation extends to uninformed guarantors. The Court of Cassation has set out the contours of this duty in a series of leading cases, including Cass. com. 15 November 2017, no. 16-16.790, which recalls that the bank is exempt from the duty to warn when the guarantor's financial capacities are manifestly proportionate to the risk - and, conversely, that it incurs liability when the risk of indebtedness was manifest and it failed to warn. Failure to do so entitles the guarantor to damages corresponding to the loss of opportunity of not having entered into the contract.<\/p>\n The Court of Cassation has ruled that liability claims by uninformed borrowers against their bankers lapse five years from the date of the first payment incident that is not rectified (Cass. 1re civ., 5 January 2022, no. 20-17.325). The starting point is therefore not the conclusion of the loan but the moment when the risk materialised. This rule opens up a much longer litigation window than is often thought.<\/p>\n<\/p><\/div>\n Le duty of care<\/strong>, This is part of the fight against money laundering and the financing of terrorism. Articles L. 561-1 et seq. of the Monetary and Financial Code require bankers to identify their customers, understand their transactions, detect suspicious movements and report any suspicious transactions to Tracfin. This duty coexists, in tension, with the duty of non-interference<\/strong> The banker has no right to interfere in his customer's affairs or to censor his transactions a priori. The relationship between these two principles is a delicate one, and has given rise to a wealth of case law, particularly in cases where the bank has allowed a fraud to go undetected or, on the contrary, wrongly blocked a legitimate transfer.<\/p>\n Finally, the\u2019obligation to advise<\/strong> in the strict sense - the obligation to recommend one product rather than another - is more limited. It is the responsibility of the banker providing investment services, who is bound by MiFID rules, but outside this scope it is essentially linked to specific situations where the customer expressly relies on the bank.<\/p>\n The above obligations give rise to half a dozen recurring areas of dispute, which are found in most of the cases handled by a banking law firm.<\/p>\n La liability of the bank providing credit<\/strong> comes out on top. Since 2005, article L. 650-1 of the Commercial Code has limited the circumstances in which this liability can be incurred, but the Court of Cassation has clarified its scope and it remains a useful defence in insolvency proceedings. Visit guide to banking liability<\/a> explores in detail the different branches of this liability and the terms and conditions of compensation.<\/p>\n The litigation of surety bond<\/strong> is also central. Since the 2021 reform, the rules of ordinary law have been brought together in the Civil Code (articles 2288 et seq.), but the mechanics remain the same: formalism of the handwritten statement, principle of proportionality, duty to warn in respect of an uninformed guarantor, compulsory annual information. The guarantor's means of defence have multiplied, and an undertaking that is poorly drafted or poorly executed by the bank may become unenforceable.<\/p>\n La bank fraud<\/strong> Since the widespread use of online payments, this has become a major area of dispute. Articles L. 133-18 et seq. of the French Monetary and Financial Code lay down a clear rule: in the event of an unauthorised payment transaction, the bank must reimburse the customer immediately, unless it can be shown that the customer was grossly negligent. The burden of proof lies with the bank. The PSD2 directive introduced strong authentication in 2019, and the Court of Cassation has specified that gross negligence on the part of the customer cannot result from the mere disclosure of a validation code obtained by a third party using an elaborate fraudulent pretext. Visit guide to bank fraud<\/a> details the reimbursement system and the mistakes that should be avoided.<\/p>\n The litigation of overall effective rate<\/strong> (TEG or TAEG) has long represented a classic angle of attack by borrowers: an erroneous TEG made it possible to obtain the substitution of the legal rate for the conventional rate. Case law, which has been more restrictive since the Order of 17 July 2019, now requires the error to have caused actual harm to the borrower. This ground still exists, but it is narrower than before.<\/p>\n La forfeiture of term<\/strong>, Last but not least, it is the obligatory step in almost all procedures for recovering unpaid credit. The Court of Cassation has tightened up the conditions under which this can take place: unless expressly stipulated otherwise, it can only take place after the debtor has been given a reasonable period in which to put things right. Irregular pronouncements provide the debtor with an effective defence. Other grounds - questionable FICP registration, abusive account closure, abrupt denunciation of an overdraft authorisation, late execution of a transfer, misappropriated international transfer - complete the picture.<\/p>\n Banking law does not stand alone. It is linked to four other areas that the firm practices, and this link explains why a banking case rarely becomes a pure banking law case.<\/p>\n With the credit law<\/a> firstly: banking law sets out the general framework, while credit law deals with the specific features of each type of financing - property credit, consumer credit, IOUs, loans between individuals, anatocism, usury rates. The distinction is sometimes formal: the two subjects overlap to a large extent, and the link is made naturally as the case progresses.<\/p>\n With the securities and guarantees<\/a> secondly: guarantees, mortgages and pledges are tools of the banker as much as they are autonomous mechanisms. A disputed guarantee case systematically combines banking law arguments (duty to warn, annual information) and security law arguments (proportionality, formalism of the handwritten note, declaration of liabilities).<\/p>\n With the enforcement procedures<\/a> The banker is a preferential creditor who, once the writ of execution has been obtained, resorts to the traditional seizures - attachment of assets, seizure of property and seizure for sale. The debtor uses the defences available under banking law: disputing the statement of claim, nullity of the forfeiture of the term, prescription, defences based on the banker's liability invoked by way of compensation.<\/p>\n With the collective proceedings<\/a> lastly, bankers are constantly involved in the process of safeguarding, reorganisation and liquidation. They declare their claims, participate in the credit institutions committee and are sometimes held liable for abusive support in the residual cases left by article L. 650-1 of the French Commercial Code. The relationship is so close-knit that a lawyer specialising in banking law and a lawyer specialising in insolvency proceedings often deal with the same cases, but from two different angles.<\/p>\n There are three situations in which you should definitely seek advice. The first is when a loan goes bad and the bank takes legal action. Before discussing the quantum, a lawyer will look at the legality of the TEG, the validity of the acceleration of the term, compliance with the duty to warn and the starting point of the statute of limitations. These arguments are not immediately obvious and must be identified before the first hearing, otherwise they will be lost.<\/p>\n The second is when a guarantor is sued. Guarantees are a minefield for the bank, and the guarantor's defences - disproportionality, failure to provide annual information, irregular handwritten wording, duty to warn - frequently result in total or partial discharges. A serious examination of the initial undertaking is essential before any payment is made.<\/p>\n The third is when a fraud occurs on an account - a misappropriated transfer, a card used abroad, a so-called \u00abfalse adviser\u00bb scam. The reflex of many customers is to turn to their bank and wait. This is a mistake. The time limits for lodging a complaint are short (thirteen months at the most) and the burden of proof is on the bank, but customers who do not structure their complaint quickly run the risk of being accused of gross negligence that they could have avoided. An early referral to a lawyer maximises the chances of full repayment.<\/p>\n Beyond these three situations, preventive advice remains of interest to company directors: analysis of financing agreements before signature, audit of a guarantee before commitment, arbitration between litigation and negotiation when the relationship with the bank becomes strained. The firm acts in Marseille and throughout France, in French and English, for individuals and businesses facing banking disputes.<\/p>\n Banking law is the branch of private law that governs banking transactions - receipt of funds from the public, lending, payment services - the institutions authorised to carry them out and the relationships between them and their customers. It combines prudential rules (supervision by the ACPR and the ECB) and a dense body of contractual law, based on the Monetary and Financial Code, the Consumer Code, the Civil Code and a large body of European law.<\/p>\n<\/details>\n The bank has four main obligations: a duty to inform, which requires it to provide clear information about the products and their terms and conditions; a duty to warn unsuspecting borrowers and guarantors when the credit presents a risk of excessive indebtedness; a duty to exercise due diligence in combating money laundering and the financing of terrorism; and, as a mirror image, a duty not to interfere, which prohibits it from interfering in its customer's affairs. Failure to comply with these obligations gives rise to civil liability.<\/p>\n<\/details>\n The transaction must be disputed with the bank in writing as soon as possible, and no later than thirteen months following the debit. In the event of an unauthorised payment transaction, articles L. 133-18 et seq. of the French Monetary and Financial Code oblige the bank to reimburse the customer immediately, unless it can be proved that the customer was grossly negligent. The assistance of a lawyer is often decisive: it helps to frame the claim so that gross negligence is not wrongly assumed.<\/p>\n<\/details>\n A number of defences exist and should be examined systematically: legality of the TEG\/TAEG, validity of the acceleration of the term (which in principle presupposes a prior formal notice allowing a reasonable period), compliance with the duty to warn, prescription of the action, accuracy of the debt statement. These arguments must be raised before the first hearing before the judge; after that stage, they become more difficult to put forward. A lawyer specialising in banking law will draw up an inventory of these arguments as soon as the summons is received.<\/p>\n<\/details>\n A bank may be held liable where it has granted a manifestly disproportionate loan to an unwary borrower without warning him or her, where it has improperly supported a business whose situation it knew to be compromised in the residual hypotheses of article L. 650-1 of the Commercial Code, or where it has failed in its duty to inform or allowed a fraud to go undetected that it could have detected. In principle, the action is time-barred after five years, but the starting point depends on the alleged breach - in the case of the duty to warn, it runs from the first payment incident that is not remedied (Cass. 1re civ., 5 January 2022, no. 20-17.325).<\/p>\n<\/details><\/div>\n<\/section>","protected":false},"excerpt":{"rendered":" Le droit bancaire est \u00e0 la fois un droit de la r\u00e9gulation \u2014 celui qui encadre l’activit\u00e9 des banques sous le contr\u00f4le de l’ACPR \u2014 et un droit du contentieux : celui des litiges entre la banque et son client. Ce guide explique les deux faces, les sources, les acteurs, les obligations du banquier et les principaux terrains de contestation.<\/p>","protected":false},"author":0,"featured_media":0,"parent":9217,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"page-templates\/template-guide-parent.php","meta":{"footnotes":""},"solent_domaine":[410],"class_list":["post-18287","page","type-page","status-publish","hentry"],"_links":{"self":[{"href":"https:\/\/solent-avocats.com\/en\/wp-json\/wp\/v2\/pages\/18287","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/solent-avocats.com\/en\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/solent-avocats.com\/en\/wp-json\/wp\/v2\/types\/page"}],"replies":[{"embeddable":true,"href":"https:\/\/solent-avocats.com\/en\/wp-json\/wp\/v2\/comments?post=18287"}],"version-history":[{"count":4,"href":"https:\/\/solent-avocats.com\/en\/wp-json\/wp\/v2\/pages\/18287\/revisions"}],"predecessor-version":[{"id":18316,"href":"https:\/\/solent-avocats.com\/en\/wp-json\/wp\/v2\/pages\/18287\/revisions\/18316"}],"up":[{"embeddable":true,"href":"https:\/\/solent-avocats.com\/en\/wp-json\/wp\/v2\/pages\/9217"}],"wp:attachment":[{"href":"https:\/\/solent-avocats.com\/en\/wp-json\/wp\/v2\/media?parent=18287"}],"wp:term":[{"taxonomy":"solent_domaine","embeddable":true,"href":"https:\/\/solent-avocats.com\/en\/wp-json\/wp\/v2\/solent_domaine?post=18287"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Players and regulation<\/h2>\n
The banker's obligations towards his customer<\/h2>\n
Major banking litigation<\/h2>\n
Links with neighbouring areas<\/h2>\n
When to consult a banking lawyer<\/h2>\n
Sources and legal references<\/summary>\n
Legal texts<\/h3>\n
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Case law<\/h3>\n
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Frequently asked questions about banking law<\/h2>\n
What is banking law?<\/summary>\n
What are a bank's main obligations to its customers?<\/summary>\n
What to do in the event of bank account fraud?<\/summary>\n
How do I dispute an unpaid loan claimed by the bank?<\/summary>\n
When should you hold your bank liable?<\/summary>\n