Database Consultation Prior To Extending Consumer Lending Is Increasingly Sensitive

Author:Mr Philippe Goutay and Anselme Mialon
Profession:Jones Day

As mentioned in the second issue of the Update, the issue of recording loans in a register is highly sensitive in France. A tentative draft provision aiming at creating a consumer credit register recording all consumer credits was ruled contrary to the Constitution on the basis that it would disproportionately encroach on privacy rights. As a result, the existing National Register of Household Credit records only debt repayment incidents meeting a number of criteria. Consulting such register for the purposes of assessing borrowers' creditworthiness is mandatory for credit institutions engaging in consumer lending in France. Failure to comply with this requirement results in forfeiture of the creditor's entitlement to contractual interest and automatic entitlement to interest at the statutory rate increased by five percentage points in the vast majority of cases. This five-point margin may paradoxically result in the amounts that the creditor is likely to receive following application of the penalty...

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