I am protected by performance bonds: compensation process

Step 1: initiation of the compensation process

1. The process is initiated when the ACPR determines that the credit institution or financing company is unable to honour the performance bonds issued by it.
   The performance bonds guarantee takes effect on the date on which the ACPR notifies the FGDR of this determination, the so-called “intervention” date.

2. This determination triggers:

   • first, the assumption or transfer of the performance bonds issued by the failed institution to the business professionals in favour of their end customers;

   • followed by the compensation of these end customers if the covered professional itself fails and the performance bond is called or has already been called but has not yet been honoured.

Step 2: identification of the failed institution's performance bonds

1. The FGDR identifies the performance bonds issued by the failed institution to business professionals.

2. Within two months, it informs these professionals of the procedure to be followed and the documents to be provided in order for the commitments to be assumed.

3. This period may be extended once by two additional months.
    

 
Step 3: calculation of compensation

1. If the performance bond is called, i.e. if the business professional defaults vis-à-vis its customer, the FGDR compensates the customer in an amount capped at 90% of the harm sustained, with an excess of €3,000 payable by the customer.
2. After the compensation is paid, the FGDR is subrogated to the customers’ rights vis-à-vis the failed institution for the amount of compensation paid; in other words, it becomes the creditor of the bank in liquidation for the amounts it has paid, in place of the customers.

Possible avenues of appeal for end customers 

End customers that have received compensation have two months to file an informal appeal with the FGDR if they disagree with the compensation. 

If the appeal is rejected, they have an additional two months to make an application to the Paris Administrative Court based on the rules governing administrative disputes.