French banks must assess solvency for all overdraft requests, even small amounts
A new French rule forces banks to evaluate customers’ ability to repay any overdraft, including those under €200, before granting approval.
A recent French ordinance, implementing a 2023 EU directive, obliges banks to scrutinize the financial standing of clients before authorising any overdraft, even those below €200 or lasting less than a month. The assessment may cover income, other resources, assets, liabilities and charges, as outlined by the government website. Overdrafts already approved prior to the change are not automatically revisited, so customers with larger existing limits may not need to re-prove their finances.
The law also mandates clearer information on credit fees, which consumer association Que Choisir welcomes as a protection measure aimed at reducing the surge in over-indebtedness cases. A YouGov France survey for MoneyVox found that one-third of French respondents had been overdrafted in the past year, with 45% of those overdrafts under €200.
Why it matters
It tightens credit checks for small loans, helping protect consumers from excessive debt.
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