Financial guarantee
A guarantee required of intermediaries who handle funds on their clients' behalf, to protect those sums in case of default. Its minimum amount is regulated and its existence checked at registration. Many brokers simply avoid handling client funds so as not to need it.
Key points
- Required only of intermediaries who collect or hold client funds.
- Its minimum amount is regulated and scales with activity volume.
- Verified at ORIAS registration and must remain valid throughout the year.
- Brokers who avoid handling client funds at all do not need to take it out.
Frequently asked questions
In what situations must a broker take out a financial guarantee?
The financial guarantee is mandatory as soon as the intermediary collects funds on behalf of clients, for example if they receive deposits or commissions to be passed on. The vast majority of mortgage brokers avoid this situation: they never handle client money and are remunerated only by the bank or by fees paid directly at notarial signing. This arrangement simplifies regulatory compliance.
What is the difference between the financial guarantee and professional liability insurance?
The financial guarantee protects client funds deposited with the intermediary: if the latter goes insolvent or misappropriates funds, the guarantor reimburses the client. Professional liability insurance, by contrast, steps in when a professional fault causes harm to the client, without money necessarily having passed through the broker. The two coverages address distinct risks and may both be required simultaneously.
How can you structure your business to avoid the financial guarantee requirement?
The simplest solution is to never collect funds on the client's behalf: all money flows directly between the client and the bank or notary. The broker is then remunerated either by the bank through a commission, or by the client via direct transfer after funds are released, without being an intermediary for the money. It is advisable to state this model explicitly in the terms of business and mandate to avoid any misunderstanding.
In practice
A brokerage firm also offers a property-management service and collects rents on behalf of its landlord clients. This activity requires it to take out a specific financial guarantee, separate from its broker professional liability insurance, to cover rental funds in transit, a step the firm could have avoided by directing collections to a notarial escrow account.
Official sources
- Article L519-4 CMF (IOBSP financial guarantee) · Légifrance
- Article L519-1 of the Monetary and Financial Code · Légifrance
- Prudential supervision and resolution authority · ACPR (Banque de France)