FCA signature rules: Insight on new rule from pension, mortgage & savings experts

FCA signature rules: Insight on new rule from pension, mortgage & savings experts

Physical meetings for things like pensions and mortgage management have been rendered all but impossible due to coronavirus. This is a problem for a multitude of financial industries as a lot of their business is conducted through meetings with the client/customer.

Pensions

Ian Browne, pensions expert at Quilter, revealed that while processing times should slow down, there is an element of danger that we should all be aware of: “It is pleasing to see the FCA has clarified that documents from providers and financial advisers do not require wet signatures, thus reducing the risk of spreading coronavirus and making the process of doing business much more streamlined and efficient. This is ultimately good news for the consumer and should make it easier for them to access and interact with their savings and investments.

“Personal finance providers should already have been thinking ahead to the possibility of temporary interruptions to critical services by ensuring as many clients as possible are set up to use online services and can submit requests digitally.

“As a result, this move will help to complete the circle and bring everyone in line to ensure their processes are digital and work for the customer.

“Given the situation with coronavirus, this is likely to be the new standard way business is conducted with our financial providers, and customers should notice an improvement in the times it takes to process instructions and the overall customer service they receive.

“However, the responsibility for firms does not end here and customers need to be on the lookout for scams as some will unfortunately try to take advantage as we get used to new ways of doing things.”

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Savings

General savings is another area that should be affected and Catherine Stewart, the head of Workplace Savings for Scottish Widows, expressed a sense of astonishment at the current situation: “It’s quite extraordinary to think that, over the course of a few weeks, we have managed to move nearly all aspects of our lives online. When it comes to managing personal finances the need for a ‘wet signature’ can slow down people’s ability to make serious financial decisions, so we welcome the FCA announcement to provide peace of mind during these difficult times.

“In reality, many providers will have already taken some of their processes online. For example, our customers can switch pension funds, increase contributions and apply for protection online or over the phone without the need for any wet signatures.

“We understand special attention needs to be placed on processes right now to ensure people can continue taking control of their finances while on lockdown and we are reviewing these measures as the situation develops to support customers as much as we can in the current situation.”

Carol Knight, the Chief Operating Officer at the Investing and Savings Alliance, also welcomed the clarification from the FCA.

However, she also warned that there could be real issues with fraud and even internal compliance departments: “We are of course fully supportive of the acceptance of electronic signatures. Far too many applications do not complete because of the requirement of a wet signature and it severely restricts the use of digital processes

“There is of course a fraud risk, however, it is not true that a wet signature is fool-proof either. “Personally my signature varies and most certainly is different now to what it was a few years back. No firm relies solely on a signature, so a combination of pieces of information is always the best and most secure route anyway to ensure validation of identity. In this digitally enable world, an electronic signature should be an acceptable item of that range of evidence.

“The biggest problem of course is getting internal compliance departments to realise the benefits are greater than the risks. For the end consumer, this new clarification will provide improved customer journeys.

“Not to mention, digital signatures is far more acceptable to the increasing numbers of people both young and old who live their lives through technology. The concept of having to print off paper, sign it, find an envelope, get to a post office (especially now!), buy a stamp and trust Royal Mail to deliver it… All challenges and many points at which the process grinds to a halt.”

Personal security

Evidently, many professionals and experts in the field are worried about the potential of an increase in fraudulent activity as more processing gets handled online.

Experts in technology and regulation provided warning on this but interestingly, they highlight that the burden should fall on companies and not the consumers themselves.

Conor Murphy, the CEO of mortgage technology provider Smartr365 commented on the changes: “For businesses going down the electronic signature route, it is imperative that advisers can accurately identify the signee digitally before submitting any documents. Furthermore, given the spike in cyber security threats, it is vital that businesses have the ability to pass documents between advisers and clients securely.

“The FCA’s explicit expectations for full client understanding of any signed documents hints to a close scrutiny of adviser decisions following the crisis.

“To protect both clients and themselves, advisers must ensure they are providing clients with separate means to confirm understanding and keep a detailed paper trail demonstrating this.”

Mark Turner, the Managing Director in Duff & Phelps’ Compliance and Regulatory Consulting practice echoed similar sentiments: “The FCA is rightly seeking to do all it can to allow businesses to continue to operate in the current environment. What they will not accept, however, is client outcomes suffering as a result.

“Where firms do move from wet-ink to electronic signatures, they should monitor data including conversion rates, cancellations and complaints. In the event this data may be pointing to changes in client behaviour, firms will need to investigate this and consider whether they need to amend their procedures accordingly.”

Mortgages

Mortgage agreements and dealings have suffered greatly from coronavirus as many of them have ground to a halt.

The industry has been pushing for change in this area for a while now and Nick Sherratt, the Managing Director for Mojo Mortgages, believes the new rules will result in much needed relief for the consumers involved: “Mojo have been pushing hard for progress in the ability to sign documents digitally and the FCAs announcement on not requiring wet copies is a step in the right direction.

“Removing the barrier of having to post documents would make it a whole lot easier to progress with a mortgage application. Current circumstances have created unnecessary challenges around getting wet signatures for mortgage deeds, as well as direct debit mandates and many more documents that need wet signatures throughout the mortgage process. This protracted process inevitably slows down a customer’s application, however, the current situation has stimulated a re-think about these unnecessary requirements.

“This move from the FCA is welcome news for us as an online mortgage broker – we’re here to provide a fresh new outlook on how the mortgage industry needs to digitise fully in order for the process to become less of a stress factor for customers.

“Despite some major progress in this, especially in the form of ‘digital deeds’, some lenders still require wet signatures of direct debit mandates and declarations, attested copied of originals and so on.

“And even though many lenders are moving towards removing this barrier completely, it still exists, but this move from the FCA should progress the need for digitalised signatures in what is now more of a digital world.”

Published at Fri, 01 May 2020 03:00:00 +0000