Credit brokers

What is a credit broker?

The law defines a credit broker as a natural or legal person who does not act as a lender and who, in the course of carrying out his commercial or professional activities, in return for a remuneration which may be pecuniary or take any other form of economic benefit that has been agreed upon:

• presents or offers credit agreements to consumers;
• assists consumers by carrying out preparatory work for credit agreements other than that referred to in point (a);
• concludes credit agreements with consumers on behalf of the creditor.

A person who offers or consents to credit agreements, where such agreements are subject to immediate assignment or subrogation in favour of another approved or registered lender designated in the agreement, are assimilated to credit brokers.

The law covers persons acting in the context of their professional activities. As such, persons who perform occasional brokerage activities, without any profit-making purpose (direct or indirect) to help a relative are not considered as brokers. On the other hand, even occasional brokerage in the context of a professional activity implies the qualification of broker within the meaning of the law.          
For example: the social service belonging to the company and which intervenes to negotiate, with creditors, a loan to consolidate an employee's debts is a broker within the meaning of the Law on Credit and Consumption (LCC) as now included in the Code of Economic Law.

Conditions for exercising the activity

The FSMA is responsible for providing access to the profession of lenders and brokers in mortgage and consumer credit.

More information on the website of the FSMA.

Role and categories of brokers at the conclusion of the credit agreement

The broker takes various steps:

• they offer the products of lenders;
• they collect the information to submit the loan application;
• they present the application to the lender;
• they transmit the lender's agreement to the borrowers;
• they collect the borrowers' signatures on contractual documents;
• they may issue the amount of the loan to the borrowers, etc.

Involvement in the process of concluding the contract at all or only at one of the stages gives rise to the status of credit broker. Except in the case of a business finder.

Credit brokers can be divided into two categories:

1. mortgage loan brokers, active in the mortgage loan sector;
2. consumer credit brokers active in the consumer credit sector.

Mortgage loan brokers are subdivided as follows:

1. credit brokers, who offer products from multiple lenders;
2. tied agents, acting on behalf of and under the full and unconditional responsibility of a single lender or several lenders belonging to the same group;
3. sub-agents, who act on behalf of and under the full and unconditional responsibility of a single credit broker, other than a sub-agent.

Consumer credit brokers are subdivided into:

1. credit brokers;
2. tied agents;
3. ancillary agents, who are sellers of goods and services of a non-financial nature acting as intermediaries in consumer credit on an ancillary basis and on behalf of one or more lenders. Under certain conditions, these agents are exempted from certain obligations, in particular those concerning pre-contractual information to the consumer, incumbent on other types of brokers. For more details, please refer to Article VII.72 of the Code of Economic Law.

A conditional seller or financial lessor is also regarded as a credit broker where such persons immediately transfer their rights to a credit company or where they immediately subrogate their rights to that company.

Responsibilities of credit brokers

The activities of credit brokers are regulated by numerous provisions of the law. The provisions relating to advertising or the duty to provide advice, for example, apply equally to the creditor and to the credit broker who assists in the conclusion of the contract.

Vis-à-vis the lender

Various obligations are incumbent on the broker vis-à-vis the lender. In particular:

• They must provide the lender with the information necessary for the creditworthiness check;
• They cannot split credit applications;
• They must also inform all creditors applied for of the amount of other credit agreements they have applied for or received for the benefit of the same consumer during the two months preceding the submission of each new application for credit;
• If the broker causes the lender damage by committing a fault, the broker is liable to the lender.

This is the case in particular with regard to the verification of the documents presented by the consumer. It is the broker who examines the original documents. At best, the lender only receives photocopies of the documents submitted. Determining the identity of the applicant and in particular their date of birth is also essential since these data are necessary to correctly consult the Central Individual Credit Register. The broker may be ordered to compensate the lender who granted credit on the basis of a false identity or a false pay slip that the broker should have detected.

If the broker aided and abetted the consumer, for example, by making a false declaration, the lender may prosecute the broker to obtain reimbursement of the full amount of damages.

Regarding the consumer

Credit brokers are subject to the same rules and share many of the same duties as lenders.

The same applies to the rules on credit promotion, the duty to provide advice and information when the contract is concluded and the duty to refrain from doing, so if the consumer is manifestly unable to repay the loan they are applying for.

Consequently, credit brokers incur their own liability in the exercise of their activities, in addition to that of the lender where appropriate. As such, the granting of credit to a consumer when a consultation of the Central Individual Credit Register reveals that they were unable to repay, may be considered as a fault of the broker and the lender. The consumer will be able to pursue their action for damages against either of the latter two. Indeed, the credit broker may not apply for credit for a consumer if, in the light of the information available to him or her, or which he or she should have known, he or she considers that the consumer will clearly be unable to meet the obligations arising from the credit agreement.

Furthermore, the credit broker may not receive, either directly or indirectly, any remuneration, in any form whatsoever, from the consumer who requested their intervention.