At the end of April this year, the Financial Conduct Authority (FCA) set out its expectations for the use of electronic signatures as chartered financial planners (CFPs) and independent financial advisers (IFAs) adapted to remote working due to the coronavirus.
The FCA said: “Firms should consider the client’s best interests rule and the fair, clear and not misleading rule 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 also advised firms could use electronic signatures for all interactions with the regulator itself.
However, some providers are slow to adapt. Ricky Chan, CFP at IFS Wealth & Pensions firm said in an article in Professional Adviser that an electronic signature was a positive step to reduce paperwork, but some had reservations about its potential throughout the financial world.
Chan says: “The issue is many legacy providers (for example, older pensions companies) still insist on wet signatures, refusing to even accept certified copies,” he argued.
“So, unless this is resolved, it’s safer to get wet signatures for important documents.”
Scott Gallacher, CFP at Rowley Private Wealth Management says if some providers refuse to accept an electronic signature, they could be in breach of Treating Customers Fairly Outcome 6 and possibly Outcome 1, not mention the Equality Act 2020.
According to TCF Outcome 1: Consumers can be confident they are dealing with firms where the fair treatment of customers is central to the corporate culture.
According to TCF Outcome 6: Consumers do not face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim, or make a complaint.
Others in the industry, however, believe it is an important step forward.
Nick Eatock, chief executive of Intelliflo, said in a recent article in FT Adviser: “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.”
Better customer experience
Smart Pension director of policy and communications Darren Philp said it was an “important milestone.”
He added in an article in Professional Adviser: “Providers and schemes who have previously insisted on ‘wet’ signatures, leading to delay and inconvenience, now have no excuse not to adopt these on legal grounds.
“The pensions industry needs to modernise and provide better service to its customers,”
“The use of electronic signatures could speed up transaction time, particularly in the case of pension transfers, leading to a better overall customer experience.”