Has it been a long-time coming, and has the COVID-19 pandemic accelerated the move to electronic signatures? On the 20 April 2020 the Financial Conduct Authority (FCA) published ‘Firms should consider the legal position themselves’ and here I give an overview of the key legal and regulatory factors to consider in relation to electronic signatures.
How has COVID-19 had an impact?
Following the implementation of the COVID-19 lockdown, financial services entities have needed to adapt and review their processes without delay to provide continuity of services to their customers. This has included an increased acceptance of electronic signatures.
What is an electronic signature?
These are defined broadly in law and can include:
What is the validity of electronic signatures?
In very recent legal developments, including confirmation from the government in March 2020 and the Law Commission in autumn 2019, an electronic signature has been designated as capable in law of being used in commercial and consumer situations. Banks, insurance companies, retailers and airlines have all been successful in moving their consumer contracting to online platforms, ticking a box to accept the financial agreement terms and conditions.
Does the FCA allow electronic signatures?
The FCA has expressly advised authorised firms to consider the legal position of electronic signatures.
The FCA’s rules do not explicitly require wet-ink signatures in agreements or prevent firms from using electronic signatures in agreements. However, there are related requirements, and the FCA directs firms to consider:
Key considerations for electronic signatures
Firms do need to make sure certain factors have been considered to ensure the validity of their electronic signatures, these include:
As lockdown measures are reduced or altered over the coming months we would expect the use of electronic signatures to stay because of ease of use and procedures having been embedded. Although clicking a button may seem like a simple option, there are legal and regulatory factors to consider and we look forward to supporting further clients in de-risking the use of electronic signatures as much as possible.