BANKING IN FRANCE

A British Account

Even if you intend to live in France it is well worth considering retaining a British bank account – or at least until the UK embraces (if ever) the euro. If nothing else, this will save the cost of currency exchange when visiting Britain.

Although it is theoretically possible for residents to manage without a French bank account, it is undoubtedly more convenient to have one. French banking rules are, however, rather different from those in most other EC countries. It is best to be aware of the way the system works.

UK Banks in France

All the major UK banks are represented in France, although outside the major cities the branches are thinly distributed.

The advantage of dealing with a UK bank in France is primarily one of communication. Banks of all nationalities are subject to French banking law.

Opening a Bank Account

Foreigners can open a special account called a compte étranger (literally a stranger’s account). Sterling can be paid in by normal bank transfer methods, or by cheque or cash. The French government has sought to reduce tax evasion by discouraging ‘cash’ deals which means that French notes and coinage cannot be paid into bank accounts.

The compte étranger can be an ordinary/current account (compte cheques) or a deposit account (compte sur livret). The ordinary account provides you with a cheque book, and the deposit account pays interest. Orders for new cheque books can take several weeks to process, so it is best to keep a spare book.

Arrangements for statements are similar to those in force in the UK, but it is unwise to assume that your statement is up to date. There are good reasons why the French clearing system is referred to as la tortue – the tortoise. Most banks provide access to accounts via the internet and this is probably the best way to monitor balances.

When you open an account, the bank will check with central records to find out if you are subject to an interdiction – a ban from holding a bank account. Inter-bank communication is excellent; a UK bankruptcy, a withdrawal of credit notice, or a court order for debt or non payment, will almost certainly prevent you from opening an ordinary account.

Interest

Gross interest is paid on deposit accounts. It is your responsibility to declare this to the tax authorities either in France or the UK. The double taxation agreement between the countries means that you are only liable to pay tax once.

Most banks impose a minimum balance for ordinary accounts – usually around €100. Interest is not ordinarily paid on these accounts unless you agree to maintain a higher minimum balance.

Credits and Debits

Cheques paid into your account are credited on the same day, even if post-dated, but you cannot draw against them until clearance is complete.

French cheques are similar to those in the UK with the amount written in both words and numbers; if the amounts are different, the words will be assumed to be correct. Cheques must be endorsed; open cheques will be honoured but this can lead to delay; crossed cheques are recommended. Cheques can only be stopped for security reasons – this generally means notifying the bank that it has been lost or stolen.

Using and Misusing Cheques

French law allows traders to refuse a cheque for any amount less than €15, and cash for any amount greater than that, but both events are rare. Indeed, as part of the continued battle against ‘cash’ deals, French law now insists that cheques are issued as payment for work or services valued at more than €150. The law has recently been extended to apply to rents and office supplies.

Cheque guarantee cards are not issued in France, but some form of proof of identity is likely to be required. French nationals carry identity cards.

The French are tough on misuse of bank accounts. If you bounce a cheque the bank will instruct you to put matters right and, if you fail to do so within the 30 day time limit, your cheque book will be withdrawn, the account frozen and you will be subject to a ban (an interdiction). The ban is recorded with the Banque de France and the file is retained for two years, during which time you may not open or operate a bank account in France. Even if your account is regularised within 30 days, a second offence within the year will incur a 12 month cheque book ban.

Financial penalties for bouncing cheques are severe. These can range from a fine of €450 to €40,000. Prison sentences of up to five years can be (and occasionally are) imposed. Misunderstanding the system, or claiming the problem arose through the slowness of the clearing system have not proved to be adequate defences in law.

Bank Dispensers and Credit Cards

Bank dispensers (distributeurs) are similar to those operating in the UK, with the additional advantage that many offer English language for transactions. Some dispensers do not accept metallic-strip cards which have now largely been replaced by ‘chip and pin’. The problem is exacerbated by the fact that French ‘chip and pin’ technology is out of step with much of the rest of Europe – including the UK. This is because the French introduced their own technology long before it was generally applied elsewhere. The French are committed to coming into line, but it is uncertain how long this may take. To make matters worse, UK debit cards (such as ‘Switch’) are virtually useless in France other than for use in distributeurs. The remedy, for the time being, is to carry a number of credit cards which have both the metallic strip and pin embedded. Supermarkets, in particular, do not like to lose a sale and you will eventually find a card that works. Increasingly, UK chip and pin cards are being found to work in French shops and banks.

Credit card companies monitor transactions in order to limit fraud. If a card, which has not been used outside the UK for some time, is suddenly used for cash withdrawals in France it may be ‘flagged’. If your card is rejected by a number of French bank dispensers this is possibly the reason. Check with your credit card issuer, or, better still, inform them of time periods when you intend to use the card, for cash withdrawals, outside the UK.

For a modest fee French banks will issue a carte de retrait (withdrawal card). Much better (but pricier) is a carte de paiement national which allows withdrawals from any dispenser in the Carte Bancaire group which includes most of the major banks. Carte Bancaire dispensers are identified by the distinctive CB logo.

Cash dispensers can be found on high streets and at strategic points close to hypermarkets and shopping precincts.