Does the current lockdown herald the end of the wet ink signature?
Under current government guidelines, advisers and mortgage brokers cannot meet face-to-face with their clients, presenting a challenge when it comes to getting documents signed.
As a consequence, electronic signatures are becoming more prevalent. The Law Commission ruled last September that electronic signatures are valid. The likes of the Institute of Chartered Accountants in England and Wales have stressed that safeguards must be in place to ensure signatures are not made under duress or fraudelently.
During the pandemic, the advice industry has had to seek alternative ways of working. But not all providers have adapted and many still require a wet signature on documentation.
Nick Eatock, chief executive of Intelliflo, says: “To overcome the challenges brought on by coronavirus, we’ve seen that advisory firms are making better use of the technologies available to maintain their client relationships, and e-signatures have been a key part of this.”
He observes that Intelliflo’s own digital signature functionality, DocuSign, experienced more than 10 times increased usage between February and April 2020.
“The changing demands of advisers and their clients have prompted many providers to introduce e-signature support on a number of key documents,” Mr Eatock adds.
Here to stay?
Although some restrictions on working are being lifted in the UK, it seems that face-to-face client meetings will remain few and far between – at least for the rest of this year.
Jackie Boylan, head of Fidelity’s FundsNetwork, notes: “Even as social distancing measures are relaxed, many firms are likely to rely upon digital measures of communicating with clients – rather than face-to-face – for some time, and therefore it’s important platforms are able to support them with this.
“Electronic signatures are likely to play an increasing role in these interactions, and processing of documentation.”
In an update published on April 20, the Financial Conduct Authority set out its expectations of firms when dealing with the need for a wet signature.
The FCA stated: “Our rules do not explicitly require wet-ink signatures in agreements, nor do they prevent firms from using electronic signatures in agreements. The validity of electronic signatures is a matter of law. Firms should consider the legal position themselves because we cannot give legal advice.”
The regulator added that firms must also consider any related requirements set out in its Principles for Businesses and general rules.
“Firms should consider the client’s best interests rule (COBS 2.1.1R) and the fair, clear and not misleading rule (COBS 4.2.1R) to ensure that, when a client signs a document electronically, this does not make it more difficult for the client to understand what they are agreeing to,” the FCA said.
Mark Turner, managing director in Duff & Phelps’ compliance and regulatory consulting practice, says: “The FCA is rightly seeking to do all it can to allow businesses to continue to operate in the current environment."