The banker’s liability in the event of credit
One of the banker’s essential functions is to grant credit to his customer. Credit is a source of liability for the person granting it. Any breach of this duty may result in the banker being held liable. Most bankers’ liability is governed by common law, both in contract with their customers and in tort with third parties. Contact a lawyer as soon as possible if you believe that your banker may be liable.
The duties of the banker :
- professional secrecy (article 226-13 et seq. of the Criminal Code) covering only confidential information ;
- a duty to advise;
- compliance with the duty to provide information, particularly pre-contractual information, on the content of the service offered to the customer;
- a duty to warn. In effect, he must alert the future uninformed contracting party to the content and consequences of his contract, in the event of a risk of excessive indebtedness. The burden of proving that the warning was given lies with the bank. The limitation period for damages runs from the time the credit is granted;
- a duty relating to the performance of the contract, implying that the agreements must be performed in good faith;
Similarly, a banker has the right to refuse his customer the credit he has requested, without the need to justify his refusal. This is due to the strong intuitu personae that exists in credit transactions. However, if their decision is based on discrimination, they may be held liable for failure to comply with the public policy provisions of the Criminal Code.
Two examples of specific situations in which a banker may be held liable:
- in the case of disputed credit at fault which has a causal link with the damage caused ;
- in the event of fraud, blatant interference in the management of the debtor or disproportionate guarantees as set out in article L 650-1 of the French Commercial Code.
Thus, granting credit to a borrower in a desperate situation constitutes fraud. The absence of discernment in the distribution of credit constitutes an unfair act. If you feel that you have been the victim of such a situation, the lawyers at Goldwin will help you take the necessary steps to ensure that the banker is held liable.
The banker’s other obligations
By virtue of his duty of non-interference, the banker must not interfere in the management and study of his customer’s solvency. This situation is covered by article L 761-2 paragraph 2 of the French Consumer Code. The only situation in which the banker may do so is in the context of combating indebtedness. Under article L.653-1 et seq. of the Commercial Code, the banker may be held liable and ordered to bear all or part of the shortfall in assets.
The banker also has a duty of vigilance, both before and during the business relationship, with regard to the transactions carried out. On the one hand, this corresponds to a general duty of prudence requiring him to refuse to lend his support to a manifestly illicit transaction. On the other hand, this duty requires the banker to report any suspicions. This report is part of the fight against money laundering and the financing of terrorism (articles 561-1 et seq. of the Monetary and Financial Code).
In all these situations, the banker may be held liable for “damage suffered as a result of the financing granted”. It will be subject to the rules of ordinary liability law and will have to pay damages for the worsening of the shortfall in assets resulting from its fault in granting the loans. Lastly, any guarantees given will be null and void.
In most cases, a lawyer will be of great assistance in ensuring that the banker is held liable on these grounds.
