11% of banking establishments were found to be in anomaly during an investigation carried out by Fraud Prevention, in order to verify in particular the application of the rules guaranteeing the free choice of borrower insurance.
In 2021 and 2022, the General Directorate for Competition, Consumer Affairs and Fraud Prevention (DGCCRF) investigated 144 credit institutions in order to verify the application of the rules aimed at protecting borrowers during the execution of their contract. home loan and those guaranteeing the free choice of borrower insurance.
As a result, 11% of banking establishments were in anomaly. Although the survey showed that the professionals inspected generally comply with the regulations aimed at protecting borrowers during the execution phase of mortgage loan contracts, the DGCCRF will nevertheless maintain its inspections with regard to borrower insurance, the infringements observed having led consumers waive their substitution request, write the experts in their conclusion.
Unfair clauses the subscription of borrower insurance
The survey shows that, in general, the regulations aimed at protecting borrowers during the execution phase of mortgage loan contracts are well implemented by professionals, such as taking into account the maximum debt ratio of 35% and the 25 year credit term.
However, a few abusive clauses have been noted in certain contracts pointed out to the DGCCRF, such as the prohibition for the customer to make a request for substitution of borrower insurance when this request occurs after the first 12 months of the mortgage loan contract. Now, since September 1, 2022, the Lemoine law allows all borrowers to change loan insurance at any time.
Another illegal clause: the subordination of the granting of the loan to group borrower insurance subscription (contract taken out by the bank with an insurer, generally its insurance subsidiary, to cover a whole group of policyholders). However, the law requires that the consumer be informed of the possibility of taking out alternative borrower insurance with the insurer of his choice, as soon as the loan is offered.
The anomalous establishments received a warning or were the subject of a compliance injunction procedure, specifies the DGCCRF.
Changing borrower insurance: a lack of transparency
When changing borrower insurance there are also problems. The most common anomaly is the imprecision of the information on the documents provided to change insurance making it impossible to process the file or making the operation more complex in order to retain the client. Thus, professionals were sanctioned when the list of documents to provide was missing from the information sent to consumers in the credit offer or when the list was incomplete, writes the DGCCRF.
Response times for insurance change requests are also still too long despite the implementation of centralized processing of insurance substitution requests by banking establishments. The legal period of 10 working days to respond to a request for a change of insurance is therefore not always respected.
More broadly, however, the survey did not not brought to light numerous refusals to change insurance which would explain the weak delegation of third-party organizations. Professionals often argue that group contracts, although more expensive, offer advantages such as broader coverage (sports practices, back and psychiatric conditions, etc.).
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