WARNING FROM THE ACPR ON THE FREEDOM OF CHOICE OF BORROWER INSURANCE

The ACPR, the supervisory authority, warned a credit institution, in the application of article L.612-30 of the Monetary and Financial Code.

Article L.612-30 of the Monetary and Financial Code

The Prudential Control and Resolution Authority (ACPR) can warn a legal person about practices that may endanger the interests of its clients, policyholders, members, or beneficiaries. Beforehand, it must have enabled the managers to present their explanations on their practices which infringe the rules of good practice of the profession.

The ACPR recommendation of good practices and the legislative framework in force

The ACPR published a recommendation (2017-R-01 of June 26, 2017) intended for the profession listing best practices relating to customer information, the procedures for processing external insurance requests, and internal control. respect for the principle of free choice. These practices must make it possible to ensure a fair and transparent analysis of requests, from the so-called “unbinding” phase, ie before the issuance of the loan offer. The recommendation ACPR is applicable since 1 st January 2018 to all insurance companies.

It follows a set of legislative provisions which are, as a reminder, the Lagarde law in 2010 (unbinding of borrower insurance from the loan contract), the Hamon law in 2014 (faculty of termination within 12 months of the loan contract). borrower insurance, from the signing of the loan offer,), then the Bourquin amendment of February 21, 2017 (option of annual substitution of borrower insurance).

A lender called to order by the ACPR

Following an on-site check, in the application of article L.612-30, the ACPR noted practices in a credit institution, which consisted of "increasing the interest rate and/or of file in return for the acceptance of an insurance external to the establishment ”.

This visit also detected cases of refusal without real justification (other than the existence of external insurance): “requests for unbinding formulated in the context of loan repurchase operations” indicates the ACPR.

"These practices, which aim to refuse or discourage the use of external insurance, are contrary to the objective pursued by the legislator to increase the possibilities of competition between the different insurance offers offered on the market" underlines the supervisory authority.

By adding that it "is particularly attentive to the correct application of the right for any borrower to freely choose his insurance contract, as long as it presents a level of a guarantee equivalent to that offered by the lending institution concerned".

On Wednesday, October 3, 2018, the Prudential Control and Resolution Authority (ACPR) confined itself for the moment to warning a bank on its commercial practices relating to borrower insurance, but "that the establishment has indicated correctly”, specifies the supervisor.

A message to the entire profession

For the first time, the ACPR has therefore pointed to an institution preventing the smooth running of delegation or termination requests while the unbinding between credit and insurance has been imposed by the Lagarde law since 2010.

The establishment in question assured the ACPR that it had corrected these bad practices. Beyond this case, the ACPR's message seems to have the main objective of reminding all professionals in the sector to respect the legislation and the ACPR's recommendation of good practices in borrower insurance.

Because, after this warning, a more severe sanction could arise for the next failing establishment.