Capping of PEA transaction fees: the channel through which an order is transmitted is not sufficient to justify the order having been executed electronically

Facts

Mr X, who holds a PEA-PME with Bank Z, issued an instruction to sell unlisted securities for a sum total of 32,274.90 euros.

The investor transmitted his order electronically, via his bank's website.

Following this operation, he noted that the bank had charged him transaction fees of 1.2%, equivalent to the sum of 387.90 euros.

The investor contested the application of the 1.2% rate and asserted that a rate of 0.5% should have been applied on the grounds that his order to sell had been placed electronically.

He argued that, since the introduction of the PACTE Law, the fees for the sale of securities within a PEA-PME have been capped at 0.5% of the sum total of the operation, provided that the operation is carried out online.

Mr X then contacted me to have the 0.5% transaction fee rate applied and, as a result, to obtain reimbursement of the difference, i.e. the sum of 225.93 euros.

Investigation

I contacted Bank Z, which responded that the channel through which an investor transmits their order (which may be electronic) should not be confused with the bank’s processing of the order when this entails manual entry in the portfolio.

For unlisted securities, an order must necessarily be carried out manually.

The bank stressed that the request is first analysed by a bank employee and then by the depositary.

The establishment's depositary is responsible for issuing the transfer, monitoring the request, ensuring that it is complete (receipt and verification of the documents attesting to ownership of the securities) and entering it in the portfolio.

In addition, the bank pointed out that an order involving unlisted securities necessarily entails manual processing (analysis of the file by a bank employee and an employee of the depositary, manual issue of the transfer, verification of the documents attesting to ownership of the securities, updating of the company register, etc.).

For these reasons, the bank informed me that it intended to keep to its refusal to satisfy Mr X's request.

Recommendation

In order to make PEAs and PEA-PMEs more attractive, decree No. 2020-95 of 5 February 2020, passed pursuant to the PACTE Law, effectively capped the fees for various operations on these accounts (opening, account maintenance, transactions, transfer and plan closure). These caps, reproduced below, have been in force since 1 July 2020[1]:
 

However, there have been many misunderstandings as to how to interpret what constitutes an operation executed “electronically”, with other investors taking the view, for example, that simply submitting an order by e-mail would justify application of the cap.

A second decree, No. 2021-925 of 13 July 2021, therefore specified that the transaction fees for unlisted securities are subject to a cap set at 1.2% rather than 0.5%. Thus, this second decree removed any ambiguity and ruled out any possibility of classifying transactions in unlisted securities as operations that can be executed electronically. Prior to the introduction of the PACTE Law, the fees for unlisted securities were very heterogeneous, with some establishments levying fees with high fixed minimums.

Consequently, I recalled the specific cap set by this second decree for transactions in unlisted securities.

This is because a distinction needs to be drawn between the transmission of the unlisted security order by the investor and its execution by the professional.

While an order for unlisted securities can be transmitted electronically by the investor, either by e-mail or through the investor's personal online area, the execution of the order by the professional will inevitably be manual.

I emphasised the fact that the establishment, by making it possible to submit stock market orders “100% online”, had effectively created ambiguity as regards the electronic nature of its operation.

However, the fact that a client transmits their order electronically, through the establishment's online client area, for example, as was the case here, is not sufficient to classify a transaction as having been executed electronically. For this to be the case, the transaction must be carried out entirely by electronic means until its execution.

Lesson to be learned

While it is true that the first decree of 2020 on PEA capping raised many questions as regards its exact scope, the second decree of 13 July 2021 clearly resolved these by stating that unlisted securities were capped at 1.2%, rather than at 0.5%.

In my opinion, such a response should have been provided by the bank's customer service department in 2023, so that the ombudsman did not have to be contacted to recall this.

I would also like to take this opportunity, while we are on the subject of cap limits, to point out another source of error, ignorance or misunderstanding, which is that if the PEA contains UCITS, the management fees received by the investment management company are not affected by the cap stipulated in the PACTE Law.