How does the performance bond guarantee work?
Some professionals, such as real estate agents, lawyers, architects and travel agents, have occasion to receive funds from their customers. For example, an advance to book a trip or build a house. These professions are regulated. They must apply for a performance bond through a bank to guarantee proper completion of the project entrusted to them. In the event of the professional's failure or bankruptcy the customers are then covered by the bank.
But what happens if the bank that issued the performance bond has failed?
The banks authorised to issue such performance bonds must also take out a guarantee.
They must be affiliated with the Performance Bond Guarantee scheme managed by the FGDR.
FGDR is the Fonds de Garantie des Dépôts et de Résolution (French Deposit Insurance and Resolution Fund). The organization in charge of protecting and compensating the customers of a failed banking institution.
Thus, if the bank goes bankrupt, the Performance Bond Guarantee takes the place of the bank until the professional's commitment is extinguished. The compensation paid out by the FGDR is capped at 90% of the amount of the performance bond, with a deductible amount of €3,000.
The Performance Bond Guarantee scheme provides a double layer of protection for regulated professions and their customers.
FGDR, Fonds de Garantie des Dépôts et de Résolution (French Deposit Insurance and Resolution Fund).
Your money is protected.