Duty to advise
The intermediary's legal obligation to recommend a solution suited to the client's situation, needs and capacity, and to make the risks clear. It is evidenced by a formalized analysis and clear pre-contractual information. Meeting it engages the broker's liability and protects the borrower.
Key points
- Legal duty to recommend a solution matched to the client's actual situation.
- Evidenced by a written, documented analysis before any offer or signature.
- Failure to comply triggers the broker's civil liability toward the client.
- Covers both the loan and borrower insurance when the broker also holds IAS status.
Frequently asked questions
How do you concretely document the duty to advise?
The broker must capture in writing the client's needs, financial situation and objectives, then set out in writing why the recommended solution meets them. A CRM or standardized intake form lets you trace this step on every file. The absence of such a record is a breach that can trigger liability in a dispute.
What is the difference between the duty to advise and the duty to inform?
The duty to inform means communicating objective facts, rates, fees, conditions, without necessarily interpreting them for the client. The duty to advise goes further: it requires analysing the client's situation and formulating a motivated, personalised recommendation. A broker must fulfil both, but it is the advisory duty that engages liability most directly.
Does the duty to advise apply to refinancing an existing loan too?
Yes, the duty to advise applies to every new transaction, including a buyout or renegotiation. The broker must verify that the operation genuinely benefits the client given early-repayment penalties, remaining term and total cost. Recommending an unsuitable refinancing exposes the professional to a claim even years after the transaction.
In practice
A broker advises a borrower purchasing a primary residence with limited savings. After analysing income, liabilities and risk profile, he records in his CRM why he rules out a variable-rate product and recommends a 20-year fixed rate: that document is the formal proof of his duty to advise.
Official sources
- Article L519-1 of the Monetary and Financial Code · Légifrance
- Prudential supervision and resolution authority · ACPR (Banque de France)