When you take out a consumer credit, the bank or lending institution has strict obligations towards you. Failure to comply with these obligations results in significant sanctions that can considerably reduce the amount you owe. Here is a comprehensive overview of your rights and the consequences for the lender in case of non-compliance.
The pre-contractual information sheet (FIPEN): an absolutely essential document
The lender’s obligation
Before any signature, the lender must provide you with a standardised European pre-contractual information sheet. This standardised document presents the essential characteristics of the credit being considered.
The sanction: total forfeiture of the right to interest
If this sheet is not provided to you, the lender totally loses its right to claim interest from you. You will only have to repay the borrowed capital, without any interest.
Key point to remember
The mere presence in your contract of a standard clause stating that “the borrower acknowledges having received the standardised European pre-contractual information sheet” is not sufficient. Such a clause is considered only as a simple, inconclusive indication. The lender must be able to prove through other evidence that it actually provided you with this document. Without such additional proof, in particular the production of the sheet itself, it cannot demonstrate that it fulfilled its information obligation.
The withdrawal form: your right to change your mind
The lender’s obligation
The lender must provide you with a detachable withdrawal form, compliant with the official standard template. This document allows you to exercise your right of withdrawal within the statutory time limits.
The sanction: total forfeiture of the right to interest
The failure to provide a compliant form results in the total forfeiture of the right to interest for the lender. You will only owe the borrowed capital.
The credit agreement: mandatory clarity and legibility
The lender’s obligation
The contract must be presented in a clear and legible manner, written in characters whose height may not be less than that of “body eight” type (approximately 3 mm). This requirement is designed to ensure that you can easily read all the clauses.
The sanction: total forfeiture of the right to interest
If the contract does not comply with these legibility requirements, the lender loses its right to receive interest.
Consultation of the payment incident file (FICP): a mandatory verification
The lender’s obligation
Before granting you credit, the lender must check the payment incident file to verify that you are not already in a situation of over-indebtedness or experiencing repayment incidents.
The sanction: forfeiture of the right to interest, in whole or in part
Failure to consult this file results in forfeiture of the right to interest, in whole or in the proportion determined by the court. The court assesses the extent of the sanction according to the seriousness of the breach.
Verification of your creditworthiness: a mandatory thorough assessment
The lender’s obligation for an initial credit
Regardless of the amount of credit, the lender must verify your creditworthiness by means of a sufficient number of items of information, including information provided by you at its request.
Key point: the lender cannot rely solely on your declarations
The lender must not stop at the declarations you make in the “dialogue sheet”. It must carry out its own verifications and request supporting documents. At a minimum, it must request the production of your bank statements and a tax notice. The lender must then ensure that you are in a position to produce these documents before granting you credit.
The sanction: forfeiture of the right to interest, in whole or in part
If this verification is not properly carried out, the lender faces forfeiture of its right to interest, in whole or in the proportion determined by the court.
Specific obligation for revolving credit facilities
In the case of revolving credit, this creditworthiness assessment must be carried out every three years, before each annual renewal of the revolving credit facility granted.
The insurance notice: complete information about coverage
The lender’s obligation
The lender must provide you with an insurance notice containing the general conditions of any insurance taken out.
The limitations of pre-printed clauses
Here again, the mere presence of a pre-printed clause in which you acknowledge receipt of the notice constitutes only an indication that the lender must corroborate with other evidence. Such a clause alone is not sufficient to prove that you were properly informed about the summary of coverage, how it operates, and special circumstances.
The sanction: total forfeiture of the right to interest
Without sufficient proof of the delivery of this notice and of the information regarding coverage, the lender loses its right to receive interest.
Revolving credit facilities: enhanced obligations
Annual renewal
The lender’s obligation
For revolving credit, before each annual renewal, the lender must re-verify your repayment capacity.
The sanction: total forfeiture of the right to interest
Failure to carry out this triennial verification results in the total forfeiture of the right to interest.
The revolving credit offer: mandatory particulars
The lender’s obligation
The credit offer must clearly state the nature of the revolving credit and provide that each instalment includes a minimum repayment of the borrowed capital. This minimum amount varies according to the total amount of credit granted, and its terms must be defined by decree.
The lender must also specify that the contract is limited to one year, renewable, and must inform you, three months before the maturity date, of the conditions for renewal of the contract, set out the repayment terms, indicate what the repayment schedule should be unless the debtor wishes otherwise, and inform you of the sums remaining due in cases where you request that the credit facility be discontinued.
The sanction: total forfeiture of the right to interest
Non-compliance with these obligations results in the total forfeiture of the right to interest for the lender.
Credits with a credit card: your freedom of choice
The lender’s obligation
When credit is linked to the use of a credit card, the lender must offer you the option to pay in full, in instalments, or to use the credit facility, according to your choice. The amount of credit granted and the repayment terms must be clearly indicated.
The sanction: total forfeiture of the right to interest
If the lender does not offer you these different payment options, it loses its right to receive interest.
Key points to remember
Pre-printed clauses are never sufficient
Remember that standard clauses printed in contracts, by which you acknowledge having received a particular document, constitute only simple indications. The lender must always provide additional evidence to demonstrate that it actually fulfilled its obligations.
The burden of proof lies with the lender
It is always for the lender to prove that it has complied with its obligations. If you dispute not having received a document or not having been properly informed, it is for the bank to prove otherwise.
Severe and automatic sanctions
Most breaches result in the total forfeiture of the right to interest. This sanction is automatic and does not depend on the seriousness of any loss you may have suffered. Certain sanctions may be proportioned by the court according to the circumstances.
Your remedies
If you find that your bank has failed to comply with one or more of these obligations when you took out your credit, you would be well advised to:
- Gather all documents you received when taking out the credit
- Note precisely what was or was not provided to you
- Consult a banking law attorney
- Consider legal proceedings to have the breaches established and obtain forfeiture of interest
These rights exist to protect you against overly aggressive commercial practices and to ensure that you take out credit with full knowledge of the facts. Do not hesitate to assert them.
