Forfeiture of the Right to Interest for Failure to Hand Over the Insurance Notice in a Consumer Credit (Versailles Court of Appeal, Civil Chamber 1-2, 17 February 2026, No. RG 24/05557)

Versailles Court of Appeal, Civil Chamber 1-2, 17 February 2026, No. RG 24/05557

What is the background to this Cofidis case?

A credit consolidation, unpaid instalments and court proceedings

In December 2020, Cofidis grants an individual a credit consolidation agreement (regroupement de crédits) in the amount of €43,600. The loan is repayable in 108 monthly instalments of €603.49, at a fixed rate of 5.05% per year (APR of 5.06%). On paper, it is an ordinary contract, the kind that millions of French people take out each year to simplify the management of their debts.

Three years later, instalments remain unpaid. On 7 November 2023, Cofidis sends its customer a formal notice to pay €4,756.74 in arrears. Thirteen days later, on 20 November 2023, in the absence of payment, it declares acceleration of the loan (déchéance du terme), that is, it demands immediate repayment of the entire outstanding principal.

In April 2024, Cofidis summons the borrower before the judge responsible for consumer protection disputes (juge des contentieux de la protection) at the Mantes-la-Jolie local court (tribunal de proximité), claiming €42,520.88 with interest at the contractual rate. The first-instance judge, however, has an unpleasant surprise in store for it: he declares forfeiture of the right to contractual interest, on the ground that Cofidis does not prove that the insurance notice was handed over. The borrower is ordered to repay only the principal, i.e. €30,643.14, without any interest. Cofidis appeals.

The over-indebtedness procedure: an obstacle for the lender?

Meanwhile, on 11 December 2023, the borrower had applied to the Yvelines Over-Indebtedness Commission for Individuals (Commission de Surendettement des Particuliers). Her situation is declared admissible. In March 2024, the Commission imposes a rescheduling of her debts over 76 months at a rate of 2%: measures imposed by the Commission at this stage of the procedure, which were subsequently challenged by the borrower before the over-indebtedness judge.

Contesting these measures, the borrower refers the matter to the over-indebtedness judge at the Versailles Court of First Instance (tribunal judiciaire), who, by judgment of 9 December 2024, fixes Cofidis’s claim at €30,267.61, without interest or penalties, this determination being made solely for the purposes of drawing up the rescheduling table, and not as an enforceable title.

The borrower then considers that her debt is now fixed by this judgment and can no longer be discussed on appeal. The Versailles Court of Appeal clearly sweeps this argument aside: the determination of the claim made by the over-indebtedness judge is not intended to grant the creditor an enforceable title. It serves only to draw up the debt rescheduling table. The case law of the French Supreme Court (Cour de cassation) is settled on this point: a creditor may perfectly well obtain an enforceable title from the court dealing with the merits even if an over-indebtedness procedure is under way, at least in the context of a rescheduling such as the one applicable here, the effects possibly varying according to the type of procedure concerned (contractual plan, imposed measures or personal recovery). Enforcement of the title will simply be deferred for the duration of the plan.

What is the lender’s obligation regarding the insurance notice?

The applicable texts: Consumer Code and European directive

Article L. 312-29 of the Consumer Code, in the numbering applicable to the contract concluded in December 2020, is the central provision. It provides that where a credit agreement offer comes with an insurance proposal, the lender must hand the borrower a notice on paper or on any other durable medium. This notice must contain the extracts of the general insurance conditions that concern the borrower: the name and address of the insurer, the duration of the contract, the risks covered and those excluded.

This requirement is not trivial. Borrower insurance, even in consumer credit, represents a significant cost that can substantially increase the total cost of the credit. The borrower must be able to understand what he or she is subscribing to, what cover is obtained and, essentially, what will not be covered in the event of misfortune. Article L. 312-17 of the same Code, in the numbering applicable to the 2020 contract, also requires the delivery of a dialogue form (fiche de dialogue), a document that sets out the borrower’s financial situation (income, expenses, ongoing loans) and contributes to the assessment of the borrower’s creditworthiness.

The sanction for these obligations is provided for in Article L. 311-48 of the Consumer Code, as cited in the decision and applicable to the contract concluded in 2020: a lender that grants credit without satisfying the prescribed formal requirements forfeits the right to interest, in whole or in the proportion set by the judge. It should be noted that these provisions have since been renumbered following the recodification carried out by Order No. 2021-1734 of 22 December 2021, which came into force on 1 July 2023, the equivalent sanction now being found in Article L. 341-5 for contracts after that date. The court applies here the old version of the text, the only one applicable ratione temporis to the December 2020 contract. In other words, the lender can now claim only repayment of the pure principal, without any remuneration.

In the background, European Directive 2008/48/EC of 23 April 2008 on credit agreements for consumers requires Member States to attach effective, proportionate and dissuasive sanctions to breaches of these obligations. It is this European requirement that will play a decisive role in the final adjustment of the sanction.

Who bears the burden of proof?

This is where the fundamental issue of the case lies. The question of the burden of proof, namely who must prove what, is decisive in practice.

The Court of Justice of the European Union settled this point in a major judgment of 18 December 2014 (CA Consumer Finance, C-449/13): the provisions of Directive 2008/48/EC preclude a standard clause from leading the judge to presume that the lender has properly performed its pre-contractual obligations. Such a clause would result in a reversal of the burden of proof contrary to the effectiveness of consumers’ rights. It is therefore for the lender to prove positively that it handed over the required documents, and not for the borrower to prove that he or she did not receive them.

How must the lender prove delivery of the notice?

Why is the standard clause not enough?

In this case, Cofidis relied mainly on two elements: first, the contractual clause by which the borrower acknowledged having read all the documents; second, the contractual bundle comprising the loan offer, the pre-contractual information form (FIPEN) and the insurance notice appearing on pages 7 to 9 and 24 to 25 of a set of 25 pages. As to the dates, the judgment itself contains a notable internal inconsistency: the statement of facts mentions an offer accepted on 4 December 2020 and a release of funds on 15 December 2020, whereas the reproduction of Cofidis’s arguments refers to the bundle being sent “on 4 December 2023”. From the judgment alone, it is not possible to determine with certainty which of these two dates is correct, and this ambiguity is internal to the decision itself.

The court, relying on well-established case law of the French Supreme Court (1st civ., 8 April 2021, No. 19-20.890; 1st civ., 7 June 2023, No. 22-15.552), recalls two fundamental rules.

The first: the acknowledgement clause appearing in the preliminary offer is merely an indication. The lender must corroborate it with one or more additional elements external to itself. The second, and this is an important additional safeguard: a document emanating solely from the bank cannot corroborate this standard clause. In other words, Cofidis cannot validate itself by producing its own bundle.

This solution is part of a coherent logic: if a lender were allowed to prove the delivery of a document by producing only that same document accompanied by a standard clause, consumer protection would be illusory. Any banking institution could put together a perfectly presented file without the borrower ever having received anything.

The inconsistent pagination of the contractual bundle, a decisive factor

But the case presents a technical detail that is particularly instructive for practice. The court notes a revealing formal inconsistency in the documentation produced by Cofidis.

The contractual bundle that Cofidis claims to have sent to the borrower was indeed paginated from 1 to 25. It even included a “user guide” explaining to the borrower which documents to check, sign and return. Yet, and this is decisive, the documents signed by the borrower and actually returned to the bank were not paginated.

This asymmetry is fatal to Cofidis’s case. How can it be asserted that the sheets returned without numbering form part of the same bundle as the paginated document sent? How can it be certified that the insurance notice appearing on pages 7 to 9 of a set of 25 pages was indeed included in the signed sheets? The absence of pagination on the signed documents breaks the link of consistency that would make it possible to regard the whole as an indivisible unit.

Cofidis put forward one further argument: the print format used by the borrower to print the offer before signing it might have caused the page numbers to disappear. The court is not persuaded. Even if the explanation is technically plausible, it is for the lender to secure its procedures so that proof of delivery is incontestable. It is the lender who must bear the evidential risk, not the borrower.

What is the exact sanction and how is it adjusted?

Forfeiture of the right to interest: loss of all contractual interest

Forfeiture of the right to interest is a genuinely severe sanction. In this case, it means that Cofidis permanently loses all the contractual interest at the rate of 5.05% provided for over 108 monthly instalments. The borrower now owes only the pure principal, i.e. €30,643.14, corresponding to the initial amount of €43,600 less the repayments already made.

The European adjustment: neither increased statutory interest nor total removal

The case does not end there. The first-instance judge had ordered the borrower to pay €30,643.14 “bearing no interest whatsoever”, in other words, without any interest at all. The Court of Appeal overturns this point, introducing a subtle but important adjustment.

Even when deprived of its contractual interest, the lender retains one right: that of claiming default interest at the statutory rate, on the basis of Article 1231-6 of the Civil Code (code civil), from the formal notice. This is a classic rule of the general law of obligations: anyone who is late in paying a sum of money owes, from the formal notice, interest at the statutory rate.

But a new difficulty arises. In principle, under Article L. 313-3 of the Monetary and Financial Code (code monétaire et financier), the statutory rate is increased by operation of law by five points two months after a court decision becomes enforceable. However, the Court of Justice of the European Union held on 27 March 2014 (Case C-565/12) that Article 23 of Directive 2008/48/EC of 23 April 2008 precludes the application of an increase in the statutory rate if its effect is to allow the lender to receive sums not significantly lower than those it would have received had it complied with its obligations. In other words: the sanction must not turn into a quasi-advantage for the lender.

The court therefore carries out a precise and rigorous arithmetical comparison.

The court finds that the unincreased statutory rate (4.22% at the date of the formal notice, 2.62% at the date of the judgment) is lower than the contractual rate of 5.05%. The sanction is therefore real and dissuasive. On the other hand, if the five-point increase were added (which would bring the rate to about 9%), Cofidis would in fact receive more than it would have received by complying with its obligations. That would be absurd and contrary to the spirit of the European text.

The court rules: the borrower must pay €30,643.14 with interest at the unincreased statutory rate from 20 November 2023 (the date of the formal notice) until full payment. The automatic five-point increase provided for by the Monetary and Financial Code is set aside.

What practical lessons for borrowers and lenders?

This decision, however technical it may appear, provides concrete and immediately useful lessons.

For borrowers, it confirms that lenders’ formal obligations are real and enforceable rights. If you have taken out a consumer credit with insurance and you are now being pursued by your credit institution, the question of proof of delivery of the pre-contractual documents (insurance notice, dialogue form, FIPEN) deserves serious examination. A failure of proof can considerably reduce your debt by removing all contractual interest.

For lenders, the judgment is a clear warning of the need to secure their documentary processes. It is not enough for the bundle to be well constructed internally: the documents actually signed and returned by the borrower must be unambiguously identifiable as part of the initial set. Consistent pagination of signed documents, the use of traceable electronic signatures or probative acknowledgements of receipt are all solutions for securing the evidence.

Finally, on the question of the interaction between the over-indebtedness procedure and legal action, the judgment usefully recalls that the two procedures are independent. A borrower in over-indebtedness cannot invoke the determination of his or her debt by the over-indebtedness judge as a definitive shield against any court order. These are two distinct mechanisms with distinct effects.

This case illustrates how consumer credit law, often perceived as a technical and austere field, can have very concrete consequences on the sums actually owed. The loss of the right to interest, here, represents several thousand euros. If you are facing recovery proceedings initiated by a credit institution, or if you wish to challenge the conditions under which your loan was granted, do not hesitate to consult an attorney specialising in banking law to examine whether all the formal obligations were complied with at the time of subscription.

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